I thought I had missed another trade when the price first tapped the .8400 handle yesterday. EUR/GBP had rallied early in the day, but it topped out exactly at .8400.
Unfortunately, because of the spread, this wasn’t enough to trigger my trade.
But Lady Luck smiled upon me later in the day as the pair turned back just enough to let me in on the ride.
Price spiked up to retest the .8400 resistance, rising just enough to trigger my sell order. I literally made it by a hair!
From then on, things went about as smooth as a baby’s butt.
While the euro weakened on Eurogroup head Jean-Claude Juncker’s reminder that Greece’s second bailout wasn’t guaranteed, the pound was strangely resilient despite the release of weak U.K. employment data.
This led EUR/GBP to fall sharply down the charts.
Right now, the pair seems to be stalling at the bottom WATR. I also realized that the higher lows on EUR/GBP’s 4-hour chart might present a problem for sellers since connecting these two lows forms a trend line that should intersect price at around the .8300 MaPs.
And with EUR/USD and EUR/JPY playing with critical support levels of their own, I think now’s a good time to lock in some pips.
Closed trade manually at .8313: +87 pips / +2.175%
It gave me a more than 2:1 return on risk yo! Needless to say, this trade has got me all pumped! I hope you guys made a few pips on it, too!
Thanks for following, fellas. May the pips keep coming! Peace out and a shout out to my boy Jeremy Lin for the LINspiration!
Trade Idea
As I pointed out in my Weekly Watch earlier this week, the .8400 handle is proving to be a major area of interest.
We saw an early test yesterday, but the level held strongly and the pair is now trading at the week open. Just like Phil Mickelson’s victory over Tiger, this wasn’t much of a surprise – it’s been holding as a major resistance level since December last year!With a lot of uncertainty surrounding the Greek debt situation, I agree with Pipcrawler in that I don’t really expect any strong breakouts this week.
Even a Moody’s outlook downgrade on the U.K. economy failed to set this pair on fire. With that said, I’m looking to go short at the top at .8400, with expectations that the range will hold for another week.
Short EUR/GBP at .8400, stop loss at .8440, take profit at .8280.
I’ve set a tight stop of just 40 pips. I believe that if the price reaches that level, it could mean a full-blown Jeremy Lin-like breakout!
For now, I’m setting my profit target at the bottom of the range at .8280, but I ain’t closing the door on exiting my trade early, similar to what I did in last week’s EUR/JPY trade.
I’ll be risking 1% of the account on this trade. Besides, the reward-to-risk ratio is pretty awesome at 3:1. I also like this trade because it serves as a nice little hedge for the EUR/CHF trade that I’m still holding on to.
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