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Good morning forex friends! It looks like the pullback higher wasn’t as high as I hoped before sellers took EUR/USD down during the Thursday session and into the Friday session. With the weekend quickly approaching, it’s time to make an adjustment.

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

As we can see on the 60-minute chart above EUR/USD, the pair hit the 38% Fib before sellers overtook the buyers near the end of the close of Thursday’s European trading session. It was all about the Dollar from that point on risk aversion flows.

With the weekend fast approaching and some top-tier economic events on the horizon (US PPI and Preliminary UoM Consumer Sentiment), I’ve decided to avoid event and weekend risk by closing down my open orders to short EUR/USD at 1.3000. No trade.

Reflecting back on this week, I know I should have definitely held on to my GBP/USD short from earlier as the trade was not invalidated on its own. That was probably the biggest mistake, especially as I didn’t take into full consideration that UK traders were on holiday on Monday, and probably ready to lighten up on risk as soon as they got back. Hopefully, it’s a lesson learned for future “weekday holiday” scenarios.

Alright, that’s it for me. Thanks for checking out my blog and be sure to stop by again next week for a new round of forex ideas and observations. Good luck and have a great weekend!

Trade Idea

Good morning! It looks like we’ve got another short-term setup, but this time on EUR/USD as the pair’s pullback may be an opportunity to jump in the downtrend.

For today, I’m taking a mostly technical trade setup on EUR/USD. The renewed concerns on a “Grexit” after this past weekend’s parliamentary elections in Greece sparked the weakness in the euro and risk aversion flows in general.

I don’t see anything coming up in this week’s forex calendar to potentially change that sentiment, so to close out the week, I’ve decided to short EUR/USD if it retests the major psychological level of 1.3000. The area has held all week and unless we get better news from the Eurozone, then it could hold on technicals alone. If we do see a retest this week, here’s what I’ll do:

Short EUR/USD at 1.3000, stop at 1.3065, profit target at 1.2910

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 return-on-risk of about 1.35:1, and since it’s a short-term trade, I’ll only risk 0.25% of my account on this trade.

For the rest of the week, we have several US events and data (US trade balance, a speech from Fed Chairman Ben Bernanke, PPI, and UoM Consumer Sentiment) to spark potential volatility, hopefully pushing the market up to my short entry orders. As always, be sure to follow me on Twitter and Facebook for updates and adjustments in case we see a sentiment change.

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.