Partner Center Find a Broker

Forex Trade Idea: 2041-09-08

It looks like I have another chance to jump into the euro downtrend thanks to a simple trend pullback setup in EUR/CAD.  Is it too late to catch the strong momentum lower?

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

EUR/CAD 1 Hour Forex Chart
EUR/CAD 1 Hour Forex Chart

Of course, I don’t know when downward momentum will come to an end, but with a nice technical setup back by a major catalyst from the ECB monetary policy meeting last week I gotta take this trade.

The technical setup is a simple one on the one hour forex chart of EUR/CAD as the pair has pulled up higher in a downtrend to just under what has the potential to be a resistance area: Fibonacci retracement and moving averages. It’s not guaranteed that sellers will jump in here, but I’m sure there are some shorter-term forex traders checking it out.

Of course, it’s been a pretty big run lower for EUR/CAD since March, which is why I’m going with a nibble to test the waters for now. I’ve already shorted at market (and another order if it pulls back higher), with a stop above the Fibs and moving averages. And my initial target is the major psychological level. Here’s what I am doing:

Short half position at market (1.4150), stop at 1.4275, initial target at 1.4000

Short half position at 1.4250, stop at 1.4275, initial target at 1.4000

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 1.00% of my account on this one if both positions are triggered, and with this trade structure, I have a potential reward-to-risk ratio of about 3.33:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!

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.