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We got a big surprise from the Eurozone today, which traders took as a signal to buy up euros like crazy today!  This took EUR/USD to my stop level at breakeven and out of my trade.  Here’s a quick review.

Original trade idea: Long-term Short on EUR/USD?

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/USD 4 hour forex chart review
EUR/USD 4 hour forex chart review

My main man Pip Diddy reported earlier today that Eurozone PMI’s surprised big time to the upside, showing that manufacturing rose to its highest levels in over 2 1/2 years.  This brought back bullish sentiment in the euro, or at the very least, signaled euro bears like myself to lighten up on short positions.

I waited to see what the market would do at 1.3600, and when that easily broke, my next decision was that from there, I can lock in around 50 pips by closing early or let it ride with the possibility sellers my scale back in and reversal the move.  Since either way, I already had a risk-free trade when I move my stop to breakeven, I decided to let it ride and try to go for more pips.

Unfortunately for my trade, it looks like the euro was squeezed higher, going beyond my stop level (currently trading around 1.3678) and taking me out at break even: 1.3650.

Total: 0 pips

In hindsight, I think I should have gotten out much sooner with such bullish news, but since I was going for a longer-term trade based on monetary policy, I don’t regret how I played it; it’s just never fun to see a gain–no matter how small–go away because of one event.  On the other hand I’m glad to get out of this trade because with the Eurozone thankfully looking much brighter, I’m not interested in playing two improving economies against each other.  I think there are way better opportunities to better focus on like my GBP/CAD long trade.

So, that’s it on EUR/USD for now, but I’ll continue to watch it to see what it does at 1.3700 and 1.3800.  For you euro bulls out there, you might want to check out my homegirl Huck’s trade idea to go long on it!

 

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