Good afternoon forex friends! After an extended break from themarkets, It feels good to jump back into the swing of things. It looks like I missed the strong selloff in EUR/USD at the start of 2012, but that doesn't
mean there's still a chance to go with the trend, right? Will there be a pullback for euro bears?
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 60m chart above, we can see my usual favorite setup of trying to jump into a trend on a pullback. I've thrown up the Fibonacci tool to help me spot a potential resistance area, and we can see that the usual area to watch (between the 38% Fib and 61% Fib) is between 1.2820 to 1.2915. This area lines up between the
last couple of consolidation areas in the downtrend, so traders may view it as potential support-turned-resistance areas.
Fundamentally, the euro is still between rock and a hard place as the massive sovereign debt is still present, austerity looks to slow down growth, and there is the idea that new ECB President Mario Draghi is open to
interest rate cuts. We do have the ECB meeting this week and it looks like the market is not expecting a rate cut this time. But if they do cut, it should work out nicely for my trade.
Last Friday, we got positive job numbers in the US in the form of +200K net jobs added (versus +155k forecast) and a dip in the unemployment rate to 8.5%. While I always remain skeptical of the BLS's numbers, it did seem to
have a positive effect for the Greenback. Also, given that the huge risk event everyone is watching out for is a European sovereign debt default, I think sentiment still favors the US Dollar in the short term.
So, with that line of thinking here's what I look to do this week:
Short half position EUR/USD at 1.2820, stop at 1.2985, pt at 1.2640
Short half position EUR/USD at 1.2920, stop at 1.2985, pt at 1.2640
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 approximately a potential 2:1 return-on-risk if both positions are triggered; possibly more if the trend is strong and I decide to ride it further.
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!
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On Tuesday January 10th, 2012 at 05:21AM by HarryPilgrim - Like - 0 People
On Tuesday January 10th, 2012 at 06:33AM by saintpip - Like - 0 People
For your half positions, I guess you are planning to put the same $/pip on each? Then 1$/pip would give 180+280=460 profit against 165+65=230 risk, meaning a 2:1 return on risk as you say. In my practice account I've decided to risk the same amount on each half position, meaning the $/pip is higher for the second half position and the overall potential return on risk is higher. Maybe I would do the same as you if it was real money though :)
On Tuesday January 10th, 2012 at 09:52AM by Pipcrawler - Like - 0 People
On Tuesday January 10th, 2012 at 09:52AM by Pipcrawler - Like - 0 People
On Tuesday January 10th, 2012 at 09:53AM by Pipcrawler - Like - 0 People
On Tuesday January 10th, 2012 at 09:59AM by HarryPilgrim - Like - 0 People
Your posts are always helpful. It's posts I disagree with that really get me thinking though!
On Tuesday January 10th, 2012 at 05:15PM by callen - Like - 0 People
I'm new here and I like reading your posts. It will definitely keeps me improving.
Today market manage to hit 1.2817. Did you manage to get your short?
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