Holiday Range on EUR/USD to Hold?

Good evening forex friends! It looks like volatility is slowing down a bit as we head into the holiday season, and EUR/USD is shaping up to be the best market to play a range if it is.

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

Today's trade idea is pretty simple. On the 15m chart above, we can see a well defined resistance area around 1.3540 - 1.3550. Given that we're still in negative euro sentiment mode, it makes sense to me to short there especially as we head into the holidays where volatility comes down a bit.

We do have news events later today from Europe in the form of various Manufacturing and Services PMI releases. In the past few releases, this data pushed the pair down more often than now, and with Europe data looking weaker with each passing month, I expect the trend to continue.

We also have the US Durable Goods Orders early in the US session later. The reaction tends to be a crapshoot, so I may close any open positions or orders ahead of time.

For now, I look to short just above that resistance area at Tuesday's high (1.3570), my stop will be half of the daily ATR, and my target will be the well defined support area as marked on the chart above. Here's what I am going to do:

Short EUR/USD at 1.3570, stop at 1.3650, pt at 1. 1.3435

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

This trade setup gives me a potential return-on-risk of about 1.6:1, potentially more if I scale into a winning position.

As always, if the market environment shifts on a new catalyst, I'll be sure to adjust my 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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Rating: 3.7/5 (3 votes cast)

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EUR/USD Heading Lower. Will It Continue Today? - No Trade

No Trade: 2011-11-01 10:50 ET

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As we can see in the chart above, the referendum call to approve the austerity measures by Greek PM George Papandreou was not taken too kindly by traders on the euro. On top of that, we got weak Chinese PMI numbers (50.4 vs. 51.2 previous month) to bring the case for a hard landing in China to further shift traders into risk aversion mode. So, the Dollar is rallying strong today, and unfortunately for me, there were pull backs for me to jump in the trend. With the pair now bouncing higher after testing 1.36, I have decided to close my open orders to short at 1.3965. No trade.

It's definitely a nice move missed. I think my recency bias caused by my last trade kept me from just jumping right at the break out. If you recall on that trade, I jumped right on the break when I could have gotten in at a better price had I been a little more patient. So for this trade I was hell bent on waiting for a pull back. Was I right or wrong? I'm gonna go with "right." More times than not, waiting for the pull back was the better move; it just so happens this time it wasn't.

At the end of the day, either entry technique would have been fine; I'll just have to keep focusing on doing a better job of assessing the possibility and strength of the breakout and potential risk-to-reward.

Well, that's it for today. I hope everyone else caught this sweet EUR/USD move. Stay tuned for new ideas and market observations by following me on Twitter and Facebook. Good luck and good trading!

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Trade Idea: 2011-10-31 19:00 ET

Good evening traders! So, sentiment has flipped on a dime once again on EUR/USD, which isn't surprising given what we've seen in the past few weeks. And with the Greek PM changing the game once again, brings a new opportunity to play my fundamental bias with the short-term trend.

Today, we saw the air come out of the over inflated positive sentiment sparked by the EU summit last week. It seems traders are starting to realize the plan was short on details, or maybe we just saw a bit of profit taking at the start of the week. Whatever the case may be, Greek Prime Minister Papandreou was straw that broke the camel's back as his request for a referendum on the reforms for Greece sparked further broad euro weakness.

I'm not sure how long the sentiment will last, but for today, I'm gonna play a day trade short on EUR/USD if the market gives me a chance to get in the downtrend at a better price. On the 15 minute chart above, I'd like to short just under the major psychological level of 1.4000. We saw consolidation there and it may be an area of interest for sellers to jump back in if retested again.

I also like a short on EUR/USD because we have a major economic event for the pair in the form of the ISM Manufacturing PMI. In the past few releases, the pair ended the day down more often than higher after the announcement, and with the data trending higher in favor of the US, we may see that again.

So, I'll be going short at the bottom of that consolidation range. My stop will be half of the daily ATR and above the consolidation range. I'll ultimately be targeting last week's low, around 1.3800, to give me around a 2:1 potential return-on-risk. Here's what I am going to do:

Short EUR/USD at 1.3965, stop at 1.4055, pt at 1.3800

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

Since this is a day trade, I'll actually only be risking 0.50% on this one. Of course, with a constant stream of news, I'll be ready to make an adjustment based on any new developments, so be sure to follow me on Twitter and Facebook for updates.

Thanks for checking out my blog, good luck and good trading!

Rating: 4/5 (9 votes cast)

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Day Trade Short on EUR/USD - Trade Closed

Trade Closed: 2011-09-20 13:50 ET

Good afternoon! This market is full of surprises lately, and today was no different as rumors of another Swiss National Bank intervention kicked off some nice volatility. All is quiet now, so I decided to close my trade for a small profit. Check it!

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

The chart above pretty much says it all. That rumor that the SNB may peg EUR/CHF to a tighter target gave a quick kick in the pants to the euro to go higher, and it looked like sellers were ready to jump on that opportunity quick. With sellers moving quickly, EUR/USD was pushed lower until it found support at the minor psychological level of 1.3650.

With the European session closed and traders taking trades off ahead of tomorrow's FOMC statement, I have decided to close my trade down as well for a nice, small profit.

Closed manually at 1.3680.

Total: +25 pips/ +0.27% gain

So, another small winner, but what could I have done differently? Well, I probably should have closed when the pair did test 1.3650. That move was sparked by an event that was not directly related to the market I was trading. In situations like these, extended moves are more the exception rather than the norm.

Besides that, I thought about closing right away after the rumor came out, but by the time I found out what the deal was, the pair was already trading near my stop. So, I let it ride. While it looks like I made the profitable decision this time, it may not turn out the same way in the future. Just something to keep in mind.

Overall, a win is a win and I'll take it! That's it for me today. Let's see what the market shows us tomorrow, and be sure to follow me on Twitter and Facebook as I like to point out setups on the fly there. Good luck and good trading!

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Trade Idea: 2011-09-20 8:25 ET

Good morning forex fanatics! I've been watching EUR/USD this week and it looks like sellers are not willing to lose the 1.3700 area to buyers. Will this area continue to hold today?

As we can see in the chart above, the week open price has held like a champ so far. This tells me sellers are still in control and given that there are talks that Greece is in some serious trouble, I think sellers may continue to dominate this area today. Also, we just got mixed housing data from the US (housing starts -0.5% and permits +3.2%); to me the starts is the bigger factor, and the weakness in that number could bring short-term risk aversion.

So, I have decided to short, with a stop using a quarter of the daily average true range. My risk will be 0.50% since this is a day trade, and my target will be today's low, giving me a 2:1 return-on-risk potential.

Shorted EUR/USD at market (1.3705), stop at 1.3750, pt at 1.3605

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

Stay tuned for updates and adjustments by following me on Twitter and Facebook! Good luck everyone!

Rating: 4.3/5 (6 votes cast)

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Intraday Trend Opportunity on USD/JPY? - Trade Closed

Trade Closed: 2011-09-13 06:00 ET

Hello forex friends! Here is the review on my USD/JPY short from yesterday. The pair did rally into the US session and the Fib area did hold as resistance, but there wasn't much action from that point on. Check it!

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 in the review chart above, I caught a bit of luck as the pair missed my stop out level by about 3 pips before reversing back lower and bringing me into a small profit. Heading into the European trading session, it looked like the pair wasn't in for much movement, so I decided to close manually at the major psychological round level (77.00) for a very small profit.

Total: +10 pips/ +0.08% gain

In retrospect, I definitely could have been a bit more conservative with my entry, but given the overall risk sentiment, a quick turn back into the yen was a likelier scenario to me at the time. Overall, I still managed to gain a little bit of profit, and a profit is still better than a loss, right?

Anywhoo, I'm scoping out some Fib retracements on Cable and EUR/USD, so be sure to stay tuned on my Twitter and Facebook for potential setups. Good luck!

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Trade Idea: 2011-09-12 06:10 ET

Good morning forex fanactics! Spotted a potential intraday trade opportunity on USD/JPY as it trends lower. Will it continue into the start of the US trading session?

It's the usual setup of selling into a downtrend on a retracement. Today, USD/JPY Is at Friday's low of 77.10, which happens to fall in line with our usual Fibonacci retracement levels. If risk aversion continues from the European debt issues, then we could see the Yen strengthen across the board as traders get back in to the market this week. Without any major events for the upcoming US session, I expect technicals and the trend to continue.

I look to short at 77.10, with my stop being half of the daily average true range of 60 pips, and my target at the minor psychological level of 76.50; a potential return-on-risk of 2:1. Here's what I will do:

Shorting USD/JPY at 77.10, stop at 77.40, pt at 76.50

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

Since this is a day trade, I will only risk 0.25% on this trade. As always, please stay tuned to adjustments by following me on Twitter and Facebook! Good luck and good trading!

Rating: 4.2/5 (8 votes cast)

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Day Trade Short on Cable - No Trade

No Trade: 2011-11-10 15:55 ET

Good afternoon forex friends! I left my open orders to short Cable on past Wednesday's trading session as I thought the setup was still valid, but maybe a little early. Today, Cable pulled back as hoped, but it looks like Dollar bulls are way too strong...

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

The market continues to be focused on the European story of new leaders, sovereign debt issues, weak growth forecasts. Throw in fresh news that Chinese exports grew at a slower pace in October (+15.9% vs. +17.1% forecast), and traders continue to be hesitant to take risk while moving capital to "safe havens."

In the 15m chart above, we can see a little bit of pull back higher as soon as the Bank of England released it's decision on interest rates and asset purchases (no change), but it was short lived as risk off sentiment took over into the close of the European trading session. The market didn't make it much higher than 1.5985, only 15 pips away from my orders before dropping back dow again over 100 pips. Doh! With the US session nearing a close, and the weekend quickly approaching, I have decided to close my short orders at 1.6000. No trade.

There really isn't much to reflect on this trade--it just didn't go my way. Overall, I got lucky with sentiment and direction, just too conservative with my entry. That's about it.

For now, it looks like risk-off for the foreseeable future, but as always, I'm gonna stay on my toes for surprise developments in the European crisis story. The weekend is almost here, but if see any valid setups I'll be sure to let ya know on my Twitter and Facebook pages. Stay tuned and good luck!

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Trade Idea: 2011-11-09 8:35 ET

Good morning forex fanatics! I'm watching a potential day trade setup on Cable as sentiment looks to be in favor of risk aversion, and on a technical setup forming on the shorter time frames.

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

It's a good day for the dollar as the resignation of Italian Prime Minister Berlusconi brought little faith back into the markets. Risk came off at the open of the European trading session (good for the Greenback), and with weak data coming from the UK (trade balance -9.8B vs. -8.0B forecast), it seems sentiment is not in favor of the Pound vs. the Dollar.

In the 15m chart above, we can see that the market finally broke below a rising trendline with a strong move. Stochastic is indicating that the near 200 pip drop may be overdone, so if we see a pull back, I'm jumping in. I threw on the Fibonacci tool, and it looks like our usual retracement levels to watch line up with a major psych number (1.6000) and Tuesday's low. I'll look to jump in there if retested. Here's what I am going to do:

Short GBP/USD at 1.6000, stop at 1.6075, pt at 1.5925

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

This trade plan has a potential return-on-risk of 1:1, and I didn't go for big profits as I don't see any major catalysts for the rest of the day. And because it's a day trade, I'm only risking 0.50% on this one.

As always, stay tuned for updates and adjustments by following me on Twitter and Facebook! Good luck and good trading!

Rating: 5/5 (5 votes cast)

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