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Closed Trade: 2009-11-26 21:22

PoD Chart

Boo. The FOMC meeting minutes did quite a number on the markets yesterday as it encouraged currency traders to diversify out of the dollar. The EURUSD, in just one day, broke out of its range, set a new yearly high, and hit my stop loss in the process.

Trade closed at 1.5100.

1st Half: -100 pips / -0.50% loss
2nd Half: -100 pips / -0.50% loss
Total: -1.00% loss

It looks like the pair has topped out though and is starting to retrace some of its gains. It could head all the way back to 1.5000 but I’m not too sure. If risk appetite remains strong, we could see another move without a retest.

Anyways, I’ll be heading to bed now… Can’t wait for Thanksgiving! Yummy, yummy, yummy turkey! Oh, by the way, just a heads up: I’ll be doing an HLHB update tomorrow so stay tuned for that! Something for you guys to read over the weekend.

Trade Idea: 2009-11-24 21:57

Good evening readers! After my last two winning trades, I’m starting to gain some confidence in this trading business. I think it’s time to get my feet wet again and jump right back in the markets! This time, I’m going to trade the grand momma of all currency pairs – the EURUSD.

PoD Chart

On Monday, we saw how risk appetite managed to boost higher yielding assets… which, as usual, proved to be harmful to the value of the dollar. However, trading was mixed yesterday, keeping a lot of major currency pairs stuck within their trading ranges. What could that mean for today? More ranging behavior? Perhaps it’s time for traders to unwind some of their dollar shorts? Could we finally see some profit taking before traders head back home and celebrate Thanksgiving by eating some turkey?

In addition to this, the US GDP was revised down to 2.8%, signalling that growth wasn’t as fast as economists initially thought. This helped taper risk taking, helping the dollar find some buyer support.

So for today’s trade, I’m taking one from Big Pippin’s playbook! Notice how the EURUSD has been moving sideways between the 1.5000 and 1.4825 range for the past couple weeks. Zooming closer, I noticed that the pair is already nearing the 1.5000 resistance. Also, by the time the pair reaches this level, stochastics would probably be in the overbought region, indicating that sellers could jump back in any time soon.

While it is true that there are a lot of data coming out tonight that could cause some volatility in the markets, I don’t think it’ll be enough to push the pair significantly past the 1.5000 handle. In my opinion, even if all the economic data comes out better than expected, price wouldn’t go all that far.

Will “history repeat itself”? Who knows? So I guess we’ll all just have to wait and see how my trade idea pans out!

Here’s what I will do:

Short at 1.5000, pt1 at 1.4900, pt2 at 1.4800, stop at 1.5100. I will be risking 1% of my account in this trade.

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