Trade Idea: 2012-01-03 23:08
After scaling through numerous charts, one thing I can say is this: the euro sucks. Over the past couple of weeks, it has melted like a block of butter in a frying pan, sinking against all of its major counterparts. One pair in particular that caught my eye is EUR/CAD.
Check out this falling trend line on the 4-hour chart:
See what I'm talking about? After chillin' around the 1.4000 handle in late November, the pair has dropped 800 pips over the past 5 weeks! Now that this pair is sitting right smack below the falling trend line, I think this could be a good opportunity to hop on the short euro bandwagon!
I've zoomed into the 1-hour chart to help me spot a good entry and it seems that now would be a good time to short. Stochastic is showing overbought signals, while the pair is finding resistance at the 1.3200 MaPs and the WO.
Fundamentally, the euro was the weakest currency during the holiday break and for good reason. Italian 10-year bond yields are still above the key 7.0% mark and this helped spark a mini-run of risk aversion midway through last week. Meanwhile, comdolls like the Canadian dollar remained steady and even posted some gains.
This tells me that perhaps the markets weren't in total risk aversion mode - rather, they were simply avoiding the euro!
I've decided to enter at market, at 1.3205 with my stop loss set at 1.3285. If price were to hit this level, it would indicate a break of the falling trend line, therefore invalidating my trade idea.
As for my profit target, I'm looking to take some profits off the table at 1.3100, which is just above the bottom WATR. Ultimately, I'm aiming for the 1.3000 handle, but I'll definitely be open to making adjustments along the way.
As usual, I'll be risking just 1% of my account on this trade.
Short EUR/CAD at 1.3205, stop loss at 1.3285, 1st profit target at 1.3100, ultimately aiming for 1.3000.
Hopefully, I'll start 2012 off on the right foot and grab some pips on this trade. Who's gonna hop on this trade with me?
On Thursday January 5th, 2012 at 07:49AM by beebolbod - Like - 0 People
Sadly i missed my entry on this... the pinbar on the H1 would have been my entry (which i took on EURUSD).... shame i missed it.... good luck - i think the Euro is doomed for a good while yet.
On Thursday January 5th, 2012 at 09:25AM by gyke - Like - 0 People
On Thursday January 5th, 2012 at 04:46PM by kemusa - Like - 0 People
Anybody suspect that the euro could be oversold? Any overnight positive news would bring a large jump to the euro. Speeches have lost their power but any actions seen as progressive haven't. I'm going to trade cautiously on the Euro.
On Thursday January 5th, 2012 at 07:59PM by HarryPilgrim - Like - 0 People
On Thursday January 5th, 2012 at 08:53PM by kemusa - Like - 1 Person
You're probably right. That with a combination of profit taking from investors could power that bounce.
On Thursday January 5th, 2012 at 09:05PM by beebolbod - Like - 1 Person
Well if you've missed the recent moves there's no price action to sell now. Selling now would be madness.
Leave A Comment
Please sign in to comment.