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Trade Closed: 2010-06-30 22:33

PoD Chart

D’oh! EURCHF hit my manually placed trailing stop at 1.3250 when it pulled back up yesterday. The euro seemed to have a temporary breather when the ECB announced that it would be lending euro zone banks 131.9 billion EUR, which was much less than what analysts expected. Still, Swissy bulls went a-chargin’ later on and pushed EURCHF close to my profit target at 1.3000. Oh well, at least I was able to catch some pips off the pair’s strong down trend. It’s just a pity I wasn’t able to go for more!

Trade closed at 1.3250: +60 pips
Total: +60 pips / +0.50% gain

It was a nice trade idea, but perhaps my stop loss was a little too tight. Then again, given how markets have been choppy like a Karate Kid punch, I think it was the right decision to lock in those profits right away.

So for now, I’ll take what I can. At least I’ve busted out of this mini-slump. Let’s see if I can do just as well on my next trades!

Trade Update: 2010-06-29 22:10

Boo yeah! The pair broke out of its bearish pennant formation and staged a massive fall. Because the pair is making such strong moves, I have decided to trail my stop manually instead.

I’m thinking that the price action could be a bit choppier than I initially expected and a tight 60-pip trailing stop might not be such a good idea. Instead, I’ll put a wider stop that’s roughly equivalent to the pair’s average daily range and adjust it every time the price breaks below a key support level. That way, I’ll be able to lock in some profits and still give my trade enough breathing room to load up more pips. Lock and load, it is!

For now, I have moved my stop to 1.3250 to lock in 60-pips while still aiming for 1.3000.

Trade Idea: 2010-06-28 23:53

PoD Chart

Ooh, check out that bearish pennant formation on the EURCHF 1-hour chart! A possible short trade? I think so! Time to bust out the cleats and go for a goal!

I snapped open the daily EURCHF chart and realized that this pair has been making one new low after another. I’m seeing a lot of long red candles on the longer-term time frames! Sellers could simply be pausing to catch their breath and to look for more sellers, which is why EURCHF is consolidating at the moment. I’m going for the breakdown of this bearish formation so I’ll be shorting a few pips below that recent spike at 1.3329. If that does break, the pair could resume its sharp dive and make fresh lows. Oh boy, this downtrend looks really strong!

To be honest, I’m a little surprised at the pair’s recent action. It’s been making new all-time lows, which comes as a total shocker given how the SNB has been expressing concern about the strength of the franc. But then again, the central bank has allowed the franc to appreciate this much. What evidence is there to show that they will intervene any time soon?

Now, I’ve scanned other euro pairs to see what’s been happening, and it seems to me that the euro is indeed one of the weaker currencies right now. Even against the pound and dollar, the euro has dropped recently, which signals to me that traders remain bearish on the euro.

There aren’t any high impact reports coming out over the rest of the week, with the only exception being the KOF Economic Barometer index. The index is expected to print a reading of 2.17, up from last month’s score of 2.16. This could give more reason for traders to move away from euro denominated assets and toward the franc.

I’m setting an ambitious profit target at the psychological 1.3000 handle. I’ve noticed in the past, the SNB has intervened at the major psychological levels like 1.5000 and 1.4000, so I think that’s where the bank may just step in once again. Since I’m doing a breakout play, I’ll set a stop equivalent to roughly half the pair’s average daily range of 120 pips. Once I’m up 60 pips, I’ll move my stop to my entry point and set a trailing stop.

Here’s the gameplan:

Short EURCHF at 1.3310, pt at 1.3000, stop at 1.3370. Since I’m shorting at a new lows and aiming for a high reward to risk ratio, I’ll only risk 0.5%, which is half my usual position size.

While the German team was absolutely amazing in their win against England, I just don’t hold the same sentiment towards the euro. In any case, hopefully I’ll be able to catch that Argentina Germany match. It’s going to be EPIC!

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