Good evening! Got a technical trade setup to play the positive sentiment shift for the euro this week. Will we see a pull back and bounce higher to close out the week?
Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.
Sentiment was highly influenced this week by positive data from various parts of the globe, including strong European bond auctions that boosted the euro higher. We saw strong demand for Spanish and French bonds,and short-term Portuguese bonds sold off better than expected as well. It seems ike it didn't take long for the markets to get used to a lower credit rating environment. Also, my main man Forexgump made a great argument that we may see an agreement this weekend that Greek bondholders may take a haircut on what they're owed. So, with this apparent new, and probably short-lived, sentiment
shift, I've decided to go with the flow and see if I can catch some of this action before the week ends.
On the 15m chart above, I've highlighted potential areas of minor support if retested. If there are no changes to sentiment in Friday's session, this area could be supported by buyers for one last push higher this week. I look to go at the top of that highlight range for a day trade. My stop will
below that area and I will go for the Major Psychological level (MaPs) as my profit target. Here's what I am going to do:
Long EUR/USD at 1.2915, stop at 1.2455, pt at 1.3000
Remember to never risk more than 1% of a trading account on anysingle trade. Adjust position sizes accordingly. Risk Disclosure.
This trade structure gives me a potential near 1.4:1 return-on-risk, and because it is a day trade, I am reducing my risk to 0.25%of my account.
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 Friday January 20th, 2012 at 12:27PM by Brad - Like - 0 People
I would be very surprised if it didn't hit 1.30. Wow, those psychological levels are really holding up well lately. Yesterday, the Nzd pulled back and literally hit 0.80 on the nose. I certainly am not saying for sure it is going up. The point is that if somebody, somewhere wasn't targeting 0.80, and that sort of thing has been occurring consistently lately. Anyway, the total point is, that it is too bad for anyone that had a buy with a stop loss at 0.80. They did, however, add liquidity back into the market with their loss. So, I'm sure that the market says a big, thankyou very much.
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