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No Trade: 2011-11-01 10:50 ET

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

As we can see in the chart above, the referendum call to approve the austerity measures by Greek PM George Papandreou was not taken too kindly by traders on the euro. On top of that, we got weak Chinese PMI numbers (50.4 vs. 51.2 previous month) to bring the case for a hard landing in China to further shift traders into risk aversion mode. So, the Dollar is rallying strong today, and unfortunately for me, there were pull backs for me to jump in the trend. With the pair now bouncing higher after testing 1.36, I have decided to close my open orders to short at 1.3965. No trade.

It’s definitely a nice move missed. I think my recency bias caused by my last trade kept me from just jumping right at the break out. If you recall on that trade, I jumped right on the break when I could have gotten in at a better price had I been a little more patient. So for this trade I was hell bent on waiting for a pull back. Was I right or wrong? I’m gonna go with “right.” More times than not, waiting for the pull back was the better move; it just so happens this time it wasn’t.

At the end of the day, either entry technique would have been fine; I’ll just have to keep focusing on doing a better job of assessing the possibility and strength of the breakout and potential risk-to-reward.

Well, that’s it for today. I hope everyone else caught this sweet EUR/USD move. Stay tuned for new ideas and market observations by following me on Twitter and Facebook. Good luck and good trading! EUR/USD Forums
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Trade Idea: 2011-10-31 19:00 ET

Good evening traders! So, sentiment has flipped on a dime once again on EUR/USD, which isn’t surprising given what we’ve seen in the past few weeks. And with the Greek PM changing the game once again, brings a new opportunity to play my fundamental bias with the short-term trend.


Today, we saw the air come out of the over inflated positive sentiment sparked by the EU summit last week. It seems traders are starting to realize the plan was short on details, or maybe we just saw a bit of profit taking at the start of the week. Whatever the case may be, Greek Prime Minister Papandreou was straw that broke the camel’s back as his request for a referendum on the reforms for Greece sparked further broad euro weakness.

I’m not sure how long the sentiment will last, but for today, I’m gonna play a day trade short on EUR/USD if the market gives me a chance to get in the downtrend at a better price. On the 15 minute chart above, I’d like to short just under the major psychological level of 1.4000. We saw consolidation there and it may be an area of interest for sellers to jump back in if retested again.

I also like a short on EUR/USD because we have a major economic event for the pair in the form of the ISM Manufacturing PMI. In the past few releases, the pair ended the day down more often than higher after the announcement, and with the data trending higher in favor of the US, we may see that again.

So, I’ll be going short at the bottom of that consolidation range. My stop will be half of the daily ATR and above the consolidation range. I’ll ultimately be targeting last week’s low, around 1.3800, to give me around a 2:1 potential return-on-risk. Here’s what I am going to do:

Short EUR/USD at 1.3965, stop at 1.4055, pt at 1.3800

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Since this is a day trade, I’ll actually only be risking 0.50% on this one. Of course, with a constant stream of news, I’ll be ready to make an adjustment based on any new developments, so be sure to follow me on Twitter and Facebook for updates.

Thanks for checking out my blog, good luck and good trading!

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