Partner Center Find a Broker

Good morning! There was no action in Wednesday’s session, so I decided to hold on to my short orders going into today’s Asia session hoping to play some range-bound action ahead of today’s big events.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

On the 15m review chart above, we can see the market didn’t move much during Wednesday’s session. I decided to keep the orders on as I was thinking we’ll see range-bound action during the Asia session ahead of today’s big events and make some quick pips.

Well, we saw a broad-based risk rally in the late morning European session, partially on rumors of a 50 bp cut in China RRR, but most likely on early reports that we may see more than the 75% PSI participation threshold will most likely be hit.

At the time I closed, I wasn’t able to find the reason for that strong risk-on move and break to the upside in EUR/USD, so I decided to close my position manually at 1.3215 as I did not understand the move.

Total: -15 pips/ -0.09% loss

So, a tiny loss for the day, and in retrospect, I should have stuck to my original plan to close out at the end of Wednesday’s session as I would have avoided the loss altogether. On the other hand, I think my reasoning to hold on to Thursday’s session was sound, it just didn’t roll my way this time.

Well, there are still two more sessions left, and boy, they are action-packed. With three major central bank rate decisions and US Non-Farm Payrolls in the works, there should be plenty of opportunities to play short-term bursts of volatility. Stay on your toes and stay tuned. Good luck and good trading!

Trade idea

Good morning forex friends! It looks like I’m joining my FX-Men brethren by going with a “risk-off” type trade for today’s US session. With EUR/USD still in downtrend mode, why fight the trend, right?

For my “Pick of the Day,” I decided to short EUR/USD if the pair retested the consolidation area formed earlier this week. The current trend is lower thanks to fears of slowing global growth and uncertainty of how many Greek bond investors will participate in tomorrow’s debt deal, so it makes sense to go with our friend, the trend.

On the 15m chart above, we can see the major psychological area of 1.32 (which is also last week’s low) held as support on Monday, then broken during Tuesday’s strong risk-off movement.

Given that the fundamental story and sentiment haven’t changed, I like that area to jump in the trend for some quick pips. My stop will be above yesterday’s high, and my profit target will be around yesterday’s low. Here’s what I’ll do if that area is retested:

Short EUR/USD 1.3200, stop at 1.3240, profit target at 1.3100

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

This trade structure gives me a potential 2.5:1 return-on-risk if both positions are triggered, and since this is a day trade, I am going to risk only 0.25% of my account.

So, a simple retracement play for the day, and as always, if the market environment shifts on a new catalyst, I’ll be sure to adjust my open orders or open position quickly. Be sure to follow me on Twitter and Facebook for updates. Thanks for checking out my blog…good luck and good trading!

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.