November 23, 2010

An Update On The EUR/USD Trade That I Mentioned on November 18

You may recall from my blog post last week that I highlighted a really good set-up to watch out for on the EUR/USD pair. I said I was hoping that the EUR/USD would go up to 1.38 or 1.39 before falling back down again so we could get a really good downward EMA crossover on the 4 hour chart, and this is exactly what happened this week.

As you can see from the chart below, the price got very close to the resistance level of 1.38 (as predicted by Toshie, who commented on this blog post) before falling back again, and produced the perfect set-up. As I said last week, the first crossover after a long established Supertrend level has been broken is often the one with the highest chance of success, and this has certainly proven to be the case in this instance.


I went short at 1.3630 last night after a brief pull-back, and left it to run overnight. I usually close half the position for 50 points and let the other half run, but as I didn't want to stay up all night I decided to set my stop loss 40 points away and set my target price at 1.3530, looking for a gain of 100 points. I figured this should be easily achievable because it's the first crossover of this new downward trend.

Anyway as you can see, this target was hit early this morning and I actually watched it hit this price target myself just before 7.00. I was in two minds about whether to close half the position or the whole position, but I decided to take the 100 point profit in the end.

At the time of writing the price is now around 1.3465 so I could have got at least another 60 points. I think it could well go a lot lower as well, and I may be sitting here when the price is at 1.30 thinking why didn't I let half the position run, but I'm happy enough with the overall result and I'm not going to beat myself up about it if the price does go that low.



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