Swing Opportunity on EUR/USD? – Trade Closed

Trade Closed: 2012-07-26 00:36 ET

Good morning forex friends! I stepped away from the markets for a quick break, and during that time is looks like my EUR/USD short worked out thanks to technical resistance and last weekend’s Spanish bank bailout plan.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

PCDPOD20120717.review.png

Techncially, it looks like that strong May support level did turn into resistance, and as I mentioned above, we got a new bailout plan from EU officials for Spain’s banks late last Friday to bring in more euro sellers. This caused a weekend gap to the downside for EUR/USD, automatically putting the market at my profit target and closing me out with a profit.

Half position +155 pips/ +0.44% gain

In retrospect, I liked everything about my plan and I probably wouldn’t change a thing. Sure, I could have maxed out my profit more by adding to the position on Friday’s strong momentum downward, but the potential for an extended move didn’t look likely given that the pair has already fallen quite a bit (around 600 pips) in July.

With the end of the week and month quickly approaching, I’m thinking the market may remain calm for now. I’m on the look out for short-term day trades for now, so be sure to stay tuned for new ideas and market observations by following me on Twitter and Facebook.

Thanks for checking out my blog, good luck and good trading!

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Trade Idea: 2012-07-17 07:40 ET

Good morning forex friends! For this week, I’m getting into EUR/USD position based on mostly technicals, as well as my long held euro bearish bias.

PCDPOD20120717.png

Technically, the market has been grinding lower over the past few months, and with a slight pull back higher I like a short in the area marked above. It represents previous areas of interest that have been broken and may attract traders who are still bearish on the European outlook and risk sentiment like myself. Recent economic data hasn’t been good to us, along with curveballs from the German Court today to continue to hurt the euro’s case to rally.

We could get a bit of volatility today with Federal Reserve Chairman Bernanke‘s testimony to Congress. The markets are still looking for him to signal a new stimulus program, QE3, but word around the web is that we’ll most likely see more rhetoric that further easing is still only an option for now. Even with their own expectations of US growth decreasing, I think the Fed is very reluctant to do more.

If he does mention options for additional easing but no concrete plans, we may see a pop higher in EUR/USD, but I think it would be short-lived. This is why I plan on scaling into my EUR/USD short instead of going in full position. Here’s what I am going to do:

Short half position EUR/USD at market (1.2280), stop at 1.2535, pt at 1.2125

Short half position EUR/USD at 1.2440, stop at 1.2535, pt at 1.2125

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Risk Disclosure.

If both positions are entered, this trade structure gives me a potential return-on-risk of about 1.30:1. I’ll look to take it off complete if a new stimulus program is announced, but again, I think there is a low probability of that for today. It is a very wide stop, which means I may hold it for a while, but as always, if market sentiment changes I’ll be sure to adjust quickly. Follow me on Twitter and Facebook to catch all my observations and adjustments. Good luck and good trading!

16 comments

  1. Rick

    Your setup is no longer valid after 2 days if the pair is still at your entry point!! Better take a small profit/loss now. Your TP of 1.21 will not be reach before weekend.Worst if the pair rally up to 1.24 to trigger your 2nd entry.How to drop 300 pips within nest 2 days unless something very very drastic happen??? Or you prefer to hold on to prove you are right??

    Reply
    • Pipcrawlerpipcrawler Post author

      I look to hold because I still don’t see a catalyst for a change in sentiment.  Sure, Bernanke mentioned other QE possibilities, but Congress had to twist his arm to mention them.  Also, when he did mention potential QE actions, he was sure to reiterate that each option will be closely examined in its cost vs. benefit.  I believe that while monetary policy did save us from financial armegeddon, each dose of QE is less effective and the potential cost vs. benefit of each new round is less attractive.  After 3 rounds of easy money and little improvement to the housing and jobs sector, it’s almost easy to see that the problems are structural and should be dealt with fiscal policies over a long period of time (10 – 20 years).   

      So, I think the USD run is still in tact and it looks like 1.23 is the line in the sand for traders for now.  If it’s broken, I may close my orders at 1.2440 and the trade down, depending on what’s driving markets at that moment. 

      Reply
  2. Ichwan

    It’s fair for me to lose 100 pips but get 700 pips in a mount. I use your anlises as a refernce to my trade.

    Reply
    • Pipcrawlerpipcrawler Post author

      Thanks for your opinion Joven.  I’m always open to learning.  What’s your analysis on EUR/USD?

      Reply
    • YH

      Joven..that’s so rude to pipcrawler..btw, pipcrawler..i love your setup n keep going to post more analysis here… :)

      Reply
  3. Karim Liateni

    Pipcrawler don’t listen to Joven. I have a bearish setup too for today but w/ other technical raisons but yes we are at resistance area. 

    Reply
    • Pipcrawlerpipcrawler Post author

      Haha It’s ok. I’m only one freakishly green creature and I can’t possibly know everything; no one can.  There’s a million traders out there who probably know better than me or something I don’t, so I always try to keep an open mind. 

      Reply
  4. Ichwan_sjah

    Keep on giving your best analysis ,two times a week is enough. I will keep on waiting your best.

    Reply

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