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Trade Closed: 2009-07-20 15:38

Well, the bullish momentum for more risk taking has continued as US earnings have surprised to the upside. Resistance at 1.4000 and 1.4100 have failed to hold and the pair made its way up to 1.4200 where I was stopped out.

Total: -200 pips/ -1.0% loss

So, after all that waiting, I took a small hit of just 1.0% – not so bad. What’s more frustrating is how the market continues to move higher on “positive” earnings reports in the US and low cost credit. There’s no fundamental bias for these moves as the job market is still down, foreclosures are still up, and companies are posting positive earnings despite falling revenues. Is the recession over? We’ll see, but for now the market is always right and I may have to just go with this new trend higher. Stay tuned and good luck!

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Trade Idea: 2009-07-13 19:47

PoD Chart

Good evening! There’s a potential short term, swing trade setup forming in EURUSD. We’ve seen a bit of retracement from last week’s risk aversion moves. Is it time for the trend lower to continue?

I have the one hour chart up top, and I highlighted the channeling price action the pair is currently in. Stochastics are indicating overbought conditions as the pair nears the top falling trendline. One other variable to take note of is that this area is around 1.4000 – a psychologically significant price level. There may be a lot of traders and institutions watching, and possibly ready to take action around that price level.

Will sellers rule once again? Are markets going to revert back to risk aversion? There is a potential for that sentiment to return, and the Euro bears may get a boost if we see weak data from the eurozone on today’s calendar. We also have some US data in the pipeline, most notably the Retail Sales and Producer Price Index data. I think the retail sales data will have the biggest impact on risk sentiment as it indicates how consumers are doing during this recession.

So, I have decided to short the pair at the top of the channel. My stop will be above last week’s high, around .14175, and I will target the area between the previous week low and bottom of the channel. Here’s what I am going to do:

Short EURUSD at 1.4000, stop at 1.4200, pt at 1.3800

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

Stay tuned, good luck and good trading!

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