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.
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!
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.
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
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!
- Fading the Spanish Bank Bailout - Closed Trade 07:35 15 June 2012
- Technical Play on the USD/JPY Range - Trade Closed 06:16 08 August 2012
- Technical Setup for a Day Play on USD/CHF - Trade Closed 03:40 19 June 2012
- Taking Another Swing at USD/CHF Long - No Trade 07:18 12 July 2012
- Swing Short to Jump in the EUR/USD Downtrend - No Trade 05:09 11 May 2012