As expected, we saw some volatility with all the data that came out. The euro was a little weaker across the board, which helped EUR/GBP dip a little lower.
Unfortunately, it wasn’t enough to get me triggered! The .8300 handle and the bottom WATR held like champs, and the price just bounced from that area!
In hindsight, I may have been a little too conservative with my entry. I probably should have just set my orders at .8300 and be contented with a slightly wider stop and lower reward-to-risk ratio.
With the weekend just around the corner, I think I’m just gonna cancel my orders and lay low.
Besides, I did bag some pips on my EUR/CHF trade, so this week wasn’t a total bust.
Thanks for following me and see y’all next week, homies!
Trade Idea
One reason I love trading support and resistance levels is that they are pretty clear on the charts.
A perfect example of this is the support level that EUR/GBP has been trading on over the past 10 weeks.
Since the beginning of 2012, EUR/GBP has been finding solid support around .8280 to .8300. You can count on that area holding just like you can count on Kobe coming through in the 4th quarter!Now that price is headed back to the support zone, I think it’s time to get ready to start establishing some long euro positions.
Sentiment also seems to be picking up now, as participation in the PSI Greek Debt Swap was much higher than anticipated.
In addition, the Fed’s acknowledgment of the U.S.’s improving labor market was consistent with their new stance that additional quantitative easing measures may not be needed. I think this could boost risk-taking over the next couple of days and give the euro a nice push as well.
While Stochastic is already showing oversold conditions, I feel more comfortable waiting for the price to retest the support zone first. I’ve set my buy order at .8290, with my stop just past the February 6 low. As my for my profit target, I’ll be aiming for .8400, which has been a major area of interest this year as well.
As for economic reports, we’ve got eurozone inflation and industrial production figures, as well as the U.K. unemployment figures on tap today. I’m hoping that these second-tier reports provide enough volatility in the markets to help me get triggered.
Buy EUR/GBP at .8290, stop at .8250, take profit at .8400.
Of course, there’s no telling what may happen in the markets and that’s why it’s important to keep my risk in check. With that said, I’ll be risking just 1% of my account on this trade.
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