Technical Short on EUR/USD at Market – Trade Closed

Trade Closed: 2013-06-12 12:40 ET

My technical trade met its demise today as USD bears maintained control and pushed the Greenback lower against the broad market.

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

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Throughout the morning Asia and European session, it looked like 1.3300 would be the line in the sand where EUR/USD bears would take back control; we event got a doji as another confirmation of a possible turn. But it looks like US traders were very bearish on the Greenback and began to price it in as soon as the markets opened in New York. Needless to say, the market hit my stop at 1.3345 and took me out of my trade for a small loss.

Total: -108 pips/ -0.50%

In hindsight, I may have put too much emphasis on the technical framework that matched what I think of as average summer behavior for EUR/USD, which is typically “no clear direction.” Clearly, this summer is probably like no other with the uncertainty of the “Fed taper” and other big changes to global monetary policy this year.

Now that the pair has broken previous resistance, I’ll look to possibly go short on the US Dollar. The momentum is strong and it looks like the trend may continue across the major pairs. Hopefully, it will continue and that I can catch it to help me break out of my Q2 funk. Stay tune and thanks for checking out my blog!

Trade Idea: 2013-06-11 9:16 ET

Good morning forex friends! Today, I’m going with a divergence signal on the longer-term EUR/USD chart. After a nice rally, is it time for euro bears and Dollar bulls to take control?

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I’ve thrown up the four hour chart of EUR/USD, and we can see a case of divergence between price action (higher highs) and the stochastic indicator (lower highs). This is occurring at an area of previous strong resistance in a ranging, summer environment.

With the exception of US retail sales (which is forecasted to be higher than the previous month read), this week’s forex calendar is void of any major economic data points. So, I think technicals may have a bit more weight in influencing price action this week.

I’ve gone short at market with a stop not too far above Friday’s highs (around 1.3305); I think a break above those highs would quickly draw in buyers of the pair because of its recent strength. And my maximum target is the very strong support area around May’s lows. Here is what I am doing:

Short half position EUR/USD at market (1.3237), stop at 1.3345, maximum profit target at 1.2850

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

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 3.5:1. The markets have been pretty schizophrenic with sentiment lately, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

  • liliku

    may good bless our entry today

    • pipcrawler

      Thanks! It looks like I entered a bit early, but hopefully my stop will keep me alive until sellers take control (if they ever do). Good luck in what ever you are trading!

  • liliku

    I have read your discretionary, I would like to asked about your time ( 4 pm ET ). Can you help to change into gmt + or – Please ? I live in Indonesia GMT + 7

    • pipcrawler

      Eastern time is currently -4 GMT.

  • liliku

    My entry at at 1.3309 thanks. Euro/US overlap session, what do you mean by that. what time it happens ( gmt +/ _)

    • pipcrawler

      Euro/US overlap is 8am to 11am ET…probably the most liquid time of day.

  • Jasurbek Kalandarov

    That’s possible. The price can hit 200 ema line around 1.30 and then jump up again.

    • pipcrawler

      Thanks Jasurbek… I appreciate your insight!

  • Robert A

    So did you get stopped out? I entered short at 3254 and cringed all the way through the overnight high.

    • pipcrawler

      Nah, the market came within 10 pips from my stop but didn’t touch…so I’m still in this trade. 1.3300 seems to be holding but we’ll see how the rest of the week goes…

      • Robert A

        I actually DCAded and got out this morning with a 50 pip profit then spent the morning trading in and out of a 10 pip channel. Not a bad day for two restless nights!

        • pipcrawler

          Congrats Robert!

          • Robert A

            It has been an interesting week and a good lesson for my first live trades. At one point overnight on tues. my account had dropped from $1k initial opening deposit to $840 but by EOD thurs. I was $$1,073 with 0 open positions. What did this newbie learn?; Leave your emotions at the door and don’t get distracted from your eye on the screen.

          • Robert A

            So 2 weeks into live trading I have learned a valuable lesson; Do not let the emotion of potential (UPL) loss affect your position. I opened a live account with $1K and try to stick as close to my no more than 50% margin use rule. I have been down as much as $200 on a trade and up as much as well. What a ride the last 10 days have been I am addicted! Maybe it’s beginners luck but as of the close on 6/21 I am + $389 trading just the EUR/USD. There have been some restless nights but zero losing trades…

  • inteligenttrader

    I had levels in on 13288 and 13266 to buy today the euro-usd and closed with 30 pips – I post my thoughts and ideas daily on twitter so your welcome to take a look and also share some views with me .

  • nic

    Your short trade should be stopped out by now. Almost ALL your short trade for this pair end ed up in loses! You should try your luck on some other pair instead instead of shorting again and again and losing over and over again!

    • pipcrawler

      Thanks for the feedback! Yup, I’m in a bit of a slump and EUR/USD hasn’t been too kind. Unfortunately, I try not to take a bias on which pair to trade, but rather look for good setups regardless of the pair.

  • PipMeHappy

    Hi PipCrawler, I like your thinking… How will your trade go? I think you may be ok…

    Here are my thoughts on EUR/USD movements…

    http://www.meetpips.com/member

  • PipMeHappy

    Just saw your last edit, after my comments earlier on… Sorry to hear you got stopped out… I still think the EUR/USD could be due a correction soon, but in this market-adjustment climate (with a possible US shift to reduced stimulus) there will be many traders wondering what to do… The docket this week looks thin, until the FOMC meeting next week… Perhaps it is a case of waiting and seeing what will happen next…

    The ECB montly report is due out about now (9am GMT / 4am EST)…

    Signs are that it is not too good (quote from DailyFX news): “ECB says price pressures in the Euro-area to remain subdued, says the council sees a downside risk to the economic outlook.”

    I am betting for a correction to the downside. Failing that the 1.3488 Fib could be resistance…

    What will be your next move? Just sit and watch or step in long the Euro… or whichever way?

    Good luck and keep us posted!

    • pipcrawler

      Thanks for your insight PipMeHappy! A lot of great stuff here. For now, I’m sticking with a day trade to play the recent US Dollar weakness and the US retail sales report as a catalyst today. Thanks and good luck to you too!