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I must admit that this trade gave me quite a scare at first. When I jumped in, the price quickly pierced through the rising trend line, making me think that it was going to head down fast. I had half a mind to close already, but I ultimately decided to let the trade breathe.

EUR/USD Hourly Chart

As the London trading session rolled along, the price slowly made its way higher.

According to many news reports, the pair rallied due to the market’s positive outlook on the ECB Interest Rate Decision. I’m very happy that my fundamental and technical analysis of the pair was spot on.

Total Gain: +76 pips / +1.53%

Trade Idea: 2012-9-5 03:40

EUR/USD Hourly Chart

Do you see that very clear uptrend in EUR/USD‘s hourly chart? I think going long ahead of the ECB interest rate decision might be a good idea so I bought the pair at the market!

With price testing support, I think I better be quick and jump in before I get left behind. After all, the pair is also exhibiting a bullish divergence, as price has made a “higher low” but Stochastic formed a “lower low.”

On the fundamental side of things, it seems that investors are anticipating a big move from the ECB. I’m anticipating this optimism to last in today’s trading and provide the euro with support, enough for EUR/USD to rally to 1.2600.

I’ll be honest and tell you that I have no idea what to expect when ECB President Draghi announces the central bank’s monetary policy decision. With that said, I promise to close my trade ahead of the event. I don’t want to get burned when volatility surges tomorrow!

But just in case we do see volatility pick up ahead of the rate decision, I placed my stop well below the most recent low at 1.2475. I think that would give my trade enough room to move.

So, here’s my game plan:

Long EUR/USD at market (1.2524), SL at 1.2475, PT 1.2600, 1% risk. Risk disclosure.

What do you think of my trade idea? Hit me up!



This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.