Swing Short to Jump in the EUR/USD Downtrend – No Trade

No Trade: 2012-05-11 05:09 ET

Good morning forex friends! It looks like the pullback higher wasn’t as high as I hoped before sellers took EUR/USD down during the Thursday session and into the Friday session. With the weekend quickly approaching, it’s time to make an adjustment.

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

PCDPOD20120511.review.png

As we can see on the 60 minute chart above of EUR/USD, the pair hit the 38% Fib before sellers overtook the buyers near the end of the close of Thursday’s European trading session. It was all about the Dollar from that point on risk aversion flows.

With the weekend fast approaching and some top tier economic events on the horizon (US PPI and Preliminary UoM Consumer Sentiment), I’ve decided to avoid event and weekend risk by closing down my open orders to short EUR/USD at 1.3000. No trade.

Reflecting back on this week, I know I should have definitely held on to my GBP/USD short from earlier as the trade was not invalidated on its own. That was probably the biggest mistake, especially as I didn’t not take into full consideration that UK traders were on holiday on Monday, and probably ready to lighten up on risk as soon as they got back. Hopefully it’s a lesson learned for future “weekday holiday” scenarios.

Alright, that’s it for me. Thanks for checking out my blog and be sure to stop by again next week for a new round of forex ideas and observations. Good luck and have a great weekend!

BabyPips.com EUR/USD Forums
Setting Newbie Expectations
My Favorite Trading Books
BabyPips.com Forex Chatroom
MeetPips.com: Pipcrawler’s Journal
Horn of Africa Hunger Crisis

Trade Idea: 2012-05-10 05:05 ET

Good morning! It looks like we’ve got another short-term setup, but this time on EUR/USD as the pair’s pull back may be an opportunity to jump in the downtrend.

PCDPOD20120510.png

For today, I’m taking a mostly technical trade setup on EUR/USD. The renewed concerns on a “Grexit” after this past weekend’s parlimentary elections in Greece sparked the weakness in the euro and risk aversion flows in general. I don’t see anything coming up in this week’s forex calendar to potentially change that sentiment, so to close out the week, I’ve decided to short EUR/USD if it retests the major psychological level of 1.3000. The area has held all week and unless we get better news from the Eurozone, then it could hold on technicals alone. If we do see a retest this week, here’s what I’ll do:

Short EUR/USD at 1.3000, stop at 1.3065, profit target at 1.2910

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

This trade structure gives me a potential return-on-risk of about 1.35:1, and since it’s a short term trade, I’ll only risk 0.25% of my account on this trade.

For the rest of the week we have several US events and data (US trade balance, a speech from Fed Chairman Ben Bernanke, PPI, and UoM Consumer Sentiment) to spark potential volatility, hopefully pushing the market up to my short entry orders. As always, be sure to follow me on Twitter and Facebook for updates and adjustments in case we see a sentiment change.

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

  • Gan Kai Yi

    good luck on this trade!

    • pipcrawler

      Thanks! but it looks like 1.2980 was the top before sellers jumped back in… doh! On to the next setup!