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Closed Open Orders: 2010-05-18 22:48

PoD Chart

Oh Phooey! I missed out on the retracement on the EURUSD! The euro is starting to look like a fur coat in the middle of summer – nobody wants it!

It seems that traders are still scared and don’t want to be caught up in long EUR moves. It just keeps falling and falling and falling! I read Pip Diddy‘s roundup today, and it seems that risk aversion got a spark from news that Germany wasn’t going to allow naked short selling in equity markets anymore.

Now, I’m not too familiar with this term, but from what I can read, it seems that traders took this as another sign to get their money out of European assets, as both the euro and European equity markets took a hit.

On the technical side of things, I didn’t notice that a rising wedge had been forming on the 1-hour chart. I could have taken a short trade on the break, which would have also been a high probability trade since the euro, for the lack of a better word, SUCKS right now. I’ll just be looking for more opportunities to short it later on retracements… Hopefully.

Trade Idea: 2010-05-17 23:35

PoD Chart

I’ve been reading about from Pip Diddy’s blog about the possibility of a “short squeeze” so I’ll be more conservative with my entry point.

I guess you could say I learned my lesson when I got burned on my last trade since I went against the trend. This time around, I’ll be going with the flow and riding the EURUSD downtrend. I drew the Fibonacci tool on the latest swing move on the 4-hour chart and noticed that the area of interest around 1.2600 lines up with the 50% retracement level. Notice how the price consolidated around that area for a while last week? Maybe that former support level could serve as resistance now.

Fundamentally, I’m still inclined to believe that investors and currency traders remain bearish on the euro. Although a plan has been written up and implemented, most believe that it is simply a band-aid solution. Paying debt with more debt just delays the situation and does not really fix the euro zone‘s underlying fundamental problems.

Now, I know my sell order is a bit far off, but the surplus of economic data from both the US and euro zone coming out in the next couple of days could take price there. Specifically, I’m referring to Germany’s ZEW economic sentiment survey, the US consumer price index and the Philadelphia manufacturing index. Off-target results on these reports could provide the volatility I need to get triggered.

I set a wide stop for this trade because a possible short squeeze could push the price much higher and I want to give this swing trade more breathing room. I placed my first profit target at the recent low of 1.2235 and my second profit target at the psychological 1.2000 handle.

Here’s what I’m gonna do:

Short EURUSD at 1.2600, TP1 at 1.2235, TP2 at 1.2000, stop loss at 1.2800.

I don’t really follow pageants, but I just happened to stumble across some headlines about the recent Miss USA contest. Hopefully, I can bounce back as gracefully as Miss Rima Fakih, who tripped on her gown but still was able to win the Miss USA crown! Way to go girl!

Thanks for reading my blog! You can also see my trades and blog posts over at MeetPips.com!

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