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Close Trade: 2010-02-03 21:41

PoD Chart

Good evening! My trade was triggered during yesterday’s European trading session and it looked like sellers jumped in by the bunches after the market hit 1.4000. It was pretty much downhill from there for the euro, and with some nice profits and major news coming up, I have decided to close my position to lock in profits and avoid event risk.

The first half of my position was closed automatically at my first profit target (1.3880). I close the remaining position at 1.3889.

1st Half: +120 pips
2nd Half: +111 pips
Total: +0.96% gain

So, I have no positions on at the moment and will closely watch price action as we get the ECB interest rate decision and the US employment data. Depending on the data, if volatility takes EURUSD back up to 1.4000, I may look into shorting again. Stay tuned and trade safe!

Another chance to jump in EURUSD downtrend?

Trade Idea: 2010-02-01 14:41

PoD Chart

Good afternoon forex friends! I’ve been watching EURUSD, and while I did miss some of the breaks lower, I think there may be a real retracement–possibly enough for me to jump into the EURUSD downtrend at a better price. Check it out!

Technically, it’s the same ol’ setup we’ve seen dozens of times before. A downtrending market on the four hour chart, possible retracement, and potential resistance at a broken “support-turned-resistance” area. I also used the fibonacci tool to determine further points of potential resistance. A lot of it lines up, and to me, that looks like a great place to put a trade as hopefully many sellers will be watching that area to jump back in.

Fundamentally, US data has been mixed with a preliminary Q4 US GDP read clocking at 5.7% and positive reads from ISM today, but weak housing and jobs data reads recently. Employment levels are still the main focus on whether or not we will see a recovery, so I will continue to keep a close eye on how that develops. This first week could foreshadow price behavior the rest of this month as we have interest rate decisions from several central banks and the US jobs data to give us an update on the employment situation in the US. Personally, I think if we don’t start seeing real job growth soon, like yesterday, risk aversion will continue to creep back and possibly benefit the greenback. It should be a doozy!!

Finally, the euro has been getting beaten the past few weeks on a combination of risk aversion and uncertainty in the economically weak eurozone countries. Even with slightly better unemployment figures and eurozone CPI reads, the euro couldn’t find support against the Greenback. It should be interesting to see what the ECB will announce on Thursday at their interest rate decision and if Trichet will follow up with any market moving statements. Not a lot of good going on for the eurozone currency–it should be an interesting and volatile, week for EURUSD!

My trade idea is based on the technical setup and my fundamentally short biased view on the eurozone and overall market risk tolerance. I will go short at the psychologically significant level of 1.40 as it happens to coincide with broken support-turned-resistance and fibonacci retracement levels. My stop will be the daily average true range of about 120 pips. I will target the previous swing lows and possible beyond if the market breaks below. Here’s what I am going to do:

Short EURUSD at 1.4000, stop at 1.4120, pt1 at 1.3880, pt2 at 1.3760

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

There’s a lot going on this week, so I may move fast in any adjustments. Stay tuned! EURUSD Forums
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