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I’m aiming for the stars, guys! In this case, my “star” is EUR/USD’s 1.2000 major psychological handle.

You’ve probably heard from Pip Diddy and Forex Gump that ECB members have been showing signs of turning less dovish as economic reports from the euro zone turn for the better.

On the other side of the pair, traders are finding it hard to extend the dollar’s gains even though Fed members are still as hawkish as ever.

After all, Uncle Sam’s reports are barely supporting the FOMC’s willingness to raise its rates by another 25 points this year.

Word on the streets is that Janet Yellen will have to be explicitly hawkish in her testimony today to make believers out of the Fed’s critics.

Last but not the least is the Brexit angle that has pushed EUR/GBP to highs not seen since November last year.

If you recall, the BOE’s hawkishness has been offsetting jitters over the Brexit negotiations. But now that some BOE members *cough* Broadbent *cough* are not as hawkish as the others, EUR/GBP is getting some lovin’ that’s pushing the euro higher across the board.

So with the Fed’s hawkishness mostly priced in; BOE’s hawkishness under question; BOJ’s commitment to providing stimulus still undeniable and the SNB’s inclination to intervene in forex markets still solid, the euro’s safe haven status has been bumped up.

A quick look at EUR/USD’s 1-hour chart shows an upside break from a triangle, which coincides with EUR/GBP’s upside break from a mid-term consolidation.

EUR/USD 1-Hour Forex Chart
EUR/USD 1-Hour Forex Chart

My buy stop order got triggered at 1.1475, which is already above last week’s highs. The pair is having trouble breaking above the top WATR level that we identified earlier this week, but I’m hoping that the momentum is strong enough for another breakout.

EUR/USD Weekly Forex Chart
EUR/USD Weekly Forex Chart

I’m ultimately aiming for the big 1.2000, which is a major area of interest for the pair back in mid-2010 and mid-2012. Oh, and it’s also currently lining up with the 200 SMA on the weekly chart!

Here’s my plan:
Risk 0.5% of my account at 1.1475, max stop loss at 1.1225, and max PT at 1.1975 for a 2.5:1 reward-to-risk ratio.

The plan is pretty long-term, so I’ll be ready to make adjustments in case there are significant developments.

What do you think? Do you have a similar trade?

Huck's Signature

See also:
My Q4 2016 Forex Trade Review and Reflections
HLHB System’s 2016 Performance Summary

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.