I promised that I would sell the pair if it goes back to the 38.2% Fib level or if it breaks below February 29’s low. And I kept my word!
Upon seeing EUR/USD make a new low, I sold two positions. I risked 0.5% on each and set different profit targets. My first PT level was at 1.3250 while the second one was set at 1.3200. The stops for both positions were set at 1.3365.
It looks like I was right in anticipating that the EU Summit would do the euro more harm than good. According to Pip Diddy, finance ministers decided to hold off Greece’s second bailout. Whew!
Anyway, here’s my total gain for this trade:
First PT hit at 1.3250: +60 pips
Second PT hit at 1.3200: +110 pips
Total: +170 pips / +1.5% gain
I must admit that I’m feeling preeettty good right now. Hopefully, I can bag another win this week.
Trade Idea: 2012-3-1 00:15
Will you look at that drop! It looks like EUR/USD is revving up for another bearish rally, giving me a chance to go short! This time, however, I’m going to be more patient and actually wait for a retest of broken support OR a break of the previous day low before going short.
You can check the chart I posted below for my potential entry levels. I have highlighted them with purple boxes.
My bearish position is also confirmed by the break of the neckline of the double top on the longer time frame. If you look at the 4-hour chart, you’ll see the price actually topped out around 1.3485 yesterday, forming a very clear double top. When a double top is found at the end of an uptrend, it usually hints that the trend is about to reverse.
If you did your homework and read Pip Diddy’s Daily Forex Fundamentals report, you probably know that the dollar rallied yesterday on Fed Reserve Chairman Ben Bernanke’s not-so-dovish speech.I’m thinking that his remarks have not yet been completely priced in by markets, or at least we’ll continue to see its bullish effect linger on the dollar in today’s trading. After all, the euro is not yet out of the woods despite the ECB’s second LTRO coming in around the market consensus.
I read somewhere that EU leaders are meeting today and tomorrow in Brussels. The most significant issue on their agenda would probably be the size of the ESM. A lot of economic gurus have said that more money needs to be added to the 500 billion EUR bailout package to calm investors. However, I think that Germany will still be as stubborn as ever in ignoring the idea.
If I am right, this would only lead to political tensions among leaders and would probably be bearish for the euro.
Now, all that’s left to do is to wait and see. I will keep my eyes glued to the charts and see whether a pullback to the 38.2% Fibonacci retracement level or a break of yesterday’s lows will happen. I’ll be sure to let you know on Twitter and Facebook where I jump in. Wish me luck!
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