HUCKDATE: Thoughts on EUR/USD


Remember the still-open trade that I cited in my last update? It closed with a 47-pip win at 1.2243 when the 50-pip trailing stop got hit.

The HLHB Trend-Catcher system’s gains were only limited last week because there were no big trends that materialized on EUR/USD. But I’m still pretty happy with my system’s performance because the RSI was able to filter a couple of fakeouts. Here’s a quick rundown of the signals that materialized:

  1. Invalid signal since RSI did not cross 50.0.
  2. Long at 1.2392. Closed due to new crossover at 1.2388. -4 pips.
  3. Invalid signal since RSI did not cross 50.0.
  4. Invalid signal since RSI did not cross 50.0.
  5. Short at 1.2390. Closed due to new crossover at 1.2424. -34 pips.
  6. Long at 1.2425. Closed due to new crossover at 1.2398. -27 pips.
  7. Short at 1.2398. Trailing stop hit at 1.2377. +21 pips.
  8. Invalid signal since RSI was not above 50.0.
  9. Short at 1.2351. Trailing stop hit at 1.2291. +60 pips.
  10. Long at 1.2314. Closed due to new crossover at 1.2275. -39 pips.

Total (including the trade from the previous week): +24 pips

I’d be lying if I told you that I’m contented with how my HLHB Trend-Catcher is doing though. I mean I’m happy with it, but I think I can tweak it more to make it even better.

I’m thinking about removing the 50-pip trailing stop for weekend trades like what I did last week. I’ll replace it with a regular 50-pip stop if the trade remains open over the weekend.

As I’ve said in my HLHB Q2 2012 review, all weekend trades that materialized during the quarter closed as winners. Also, the open trade that I pointed out in my last update could’ve hit my 200-pip profit target at 1.2396 had there been no trailing stop in place.

What do you think? Please lemme know what your thoughts are by voting in the poll! Thank you!


As for my EUR/USD trade, it’s currently up 89 pips. That may seem a lot, but I also have a wide 100-pip stop.

This means that I need to let it ride the downtrend further so that my reward-to-risk ratio is more than 1:1. I am trading the daily time frame, which means I’ll be holding on to the trade longer than usual.

It looks like the trend line held. Yikes! I’m moving my stop to breakeven to be safe.

HLHB Trend-Catcher


There were a lot of fakeouts last week, but thankfully, the HLHB Trend-Catcher still ended up positive. The gain wasn’t impressive though, as the system only bagged a grand total of 15 pips.

Here are the trades and their corresponding results:

  1. Invalid signal since RSI was already below 50.0 before the downward crossover.
  2. Another invalid signal since RSI was over 50.0 before the upward crossover.
  3. Invalid signal since RSI was below 50.0 before the downward crossover.
  4. Long at 1.2296. Closed when 50-pip trailing stop was hit at 1.2225. +71 pips.
  5. Short at 1.2326. Closed due to new crossover at 1.2342. -16 pips.
  6. Long at 1.2342. Closed when 50-pip trailing stop was hit at 1.2337. -5 pips.
  7. Short at 1.2334. Closed due to new crossover at 1.2333. -1 pip.
  8. Long at 1.2333. Closed due to new crossover at 1.2323. -10 pips.
  9. Short at 1.2323. Closed due to new crossover at 1.2334. -11 pips.
  10. Long at 1.2334. Closed due to new crossover at 1.2311. -23 pips.
  11. Short at 1.2311. Closed due to new crossover at 1.2304. +7 pips.
  12. Long at 1.2304. Closed due to new crossover at 1.2283. -21 pips.
  13. Invalid signal since RSI was below 50.0 before the downward crossover.
  14. Long at 1.2325. Closed due to new crossover at 1.2349. +24 pips.
  15. Invalid signal since RSI was already above 50.0.
  16. Another invalid signal since RSI did not cross the 50.0 level.
  17. RSI was above 50.0 during the crossover. Invalid signal.

Total gain: +15 pips

As you can see, there were numerous fakeouts, especially during the middle of the week. What I’ve learned from the months I have been testing the system is that fakeouts are normal. Systems catch them from time to time, but you can’t completely eliminate them. I’m just glad that the system had another positive week.

I believe its about time you opened a thread to get the programming wizards to make this system into an EA…


You could say it was a “so-so” week for the HLHB Trend-Catcher. It came out with a gain at the end of the week, but its win wasn’t spectacular. Here’s the list of trades that the system generated:

  1. Invalid signal since RSI was above 50.0 before the crossover candle.
  2. Invalid signal since RSI was below 50.0 before the crossover candle.
  3. Long at 1.2507. Closed at 1.2556 due to new crossover. +49 pips.
  4. Invalid signal since RSI was above 50.0.
  5. Long at 1.2538. Closed at 1.2499 due to new crossover. -39 pips.
  6. Short at 1.2499. Closed at 1.2516 due to new crossover. -17 pips.
  7. Invalid long since RSI was below 50.0.
  8. Invalid signal since RSI did not cross the 50.0 level from above.
  9. Long at 1.2546. Closed at 1.2588. +42 pips.

Total Gain: +42 pips

Am I bummed out that my system hasn’t been raking in a lot of pips? To an extent, yes, but I have to understand that it is the summer. During this time, the market tends to range, which means less trend plays and big moves.

I should even be happy now that my system ISN’T losing. Most trend-following systems normally experience huge drawdowns in times like this.


In my last trade idea, I incorporated the 100 SMA in my discretionary system. Taking a look at the indicator on the daily timeframe of EUR/USD, we see that resistance on the moving average held!

Going into the weekend, I had a bullish bias on the pair because I was anticipating Fed Reserve Chairman Ben Bernanke to confirm QE3. Reports say that the central bank head honcho did hint at further easing. However, EUR/USD didn’t rally because of renewed concerns about Spain.

To be honest, I don’t know if I should buy or sell the pair now. Nonetheless, I will still keep close tabs on it. I’ll gauge what the more dominant theme (i.e., the prospect of QE3 vs. the possibility of a Spanish default) will be and make my decision based on market sentiment.

So, there you go! I hope y’all got in on the action on the charts last week.

For those following my HLHB Trend-Catcher, the last signal that materialized (long at 1.2584) is still open!



Do you see that very clear uptrend in EUR/USD’s hourly chart? I think going long ahead of the ECB interest rate decision might be a good idea so I bought the pair at market!

With price testing support, I think I better be quick and jump in before I get left behind. After all, the pair is also exhibiting a bullish divergence, as price has made a “higher low” but Stochastic formed a “lower low.”

On the fundamental side of things, it seems that investors are anticipating a big move from the ECB. I’m anticipating this optimism to last in today’s trading and provide the euro with support, enough for EUR/USD to rally to 1.2600.

I’ll be honest and tell you that I have no idea what to expect when ECB President Draghi announces the central bank’s monetary policy decision. With that said, I promise to close my trade ahead of the event. I don’t want to get burned when volatility surges tomorrow!

But just in case we do see volatility pick up ahead of the rate decision, I placed my stop well below the most recent low at 1.2475. I think that would give my trade enough room to move.

So, here’s my game plan:

Long EUR/USD at market (1.2524), SL at 1.2475, PT 1.2600, 1% risk. Risk disclosure.

What do you think of my trade idea? Hit me up!

*Cross-posted from my blog, The Loonie Adventures of the Forex Noob

hey Huck

Seeing that its dropped down to level 505 - 510 right now. I am wondering what your strategy would be now? Is there any support for a bounce to break even?

cheers for the idea.

I kept it open! I’ll post an update in a bit :slight_smile:


I must admit that this trade gave me quite a scare at first. When I jumped in, price quickly pierced through the rising trend line, making me think that it was going to head down fast. I had half a mind to close already, but I ultimately decided to let the trade breathe.

As the London trading session rolled along, price slowly made its way higher.

According to many news reports, the pair rallied due to the market’s positive outlook on the ECB Interest Rate Decision. I’m very happy that my fundamental and technical analysis on the pair was spot on.

Total Gain: +76 pips / +1.53%

I was also looking to go long at 20. But as I was drawing my pretty lines it started bouncing back. I then got in Long at 05. I closed off at around 65 as it starting getting choppy was worried it might fall again…Issues of having a full time job and trading.

Thanks again. Still a happy 60 pips I made

Ah, 'tis a sad week for the HLHB Trend-Catcher 3.0. Even though the pair trended upwards, the extreme volatility during the middle of the week distorted the RSI, preventing the system to jump in on the trend. In addition, the volatility the pair experienced also kept my trades from staying long enough to profit!

But there is good news: the trade that was left open the week before ended up with a huge win. It closed at the first crossover of the week, which enabled it to bag 150 pips.


You can see clearly that EUR/USD mostly moved higher during the week. Unfortunately, the rally was also a bumpy one! The German Constitutional Court’s ruling as well as the Fed’s FOMC Statement caused the pair to spike a couple of times.

Here are the signals that the HLHB Trend-Catcher generated:

  1. Invalid signal since RSI did not cross the 50.0 level.
  2. Another invalid signal. The RSI was already above 50.0 when the upward crossover happened.
  3. Sold at 1.2780. Closed due to new crossover at 1.2778. -2 pips.
  4. Long at 1.2778. Closed due to new crossover at 1.2767. -11 pips.
  5. Short at 1.2767. Closed due to new crossover at 1.2805. -38 pips.
  6. Long at 1.2805. Closed when 50-pip trailing stop was hit at 1.2822. +17 pips.
  7. Invalid signal since RSI was already below 50.0 prior the crossover candle.
  8. Invalid signal since RSI was already above 50.0 prior the crossover candle.

Overall, including the week prior’s trade, the system brought in a net total of 116 pips. Not bad!

As I for my discretionary system, I didn’t get in on any action last week. I don’t want to sit on the sidelines for long though, this is why I’ll be keeping close tabs on USD/CHF in the coming days. Should a valid trade setup materialize, you can count on me to pull the trigger!

I hope you guys have a good week. Good luck!

XOXO,

Huck


It looks like there’s a bearish confluence on EUR/USD around a previous support area. So this week, I’ll try to score a win by shorting the pair. Wish me luck, pretty please!

Connecting the pair’s most recent highs, we actually see that a falling trend line has materialized. I used the Fibonacci tool and realized that the trend line actually coincides nicely with the 61.8% level and last week’s low around 1.3020. Very tempting, eh?

Fundamentally, I think that there are also a lot of downside risks, especially when you take into account all the things that are going on in the euro zone at the moment.

For one, there has been no request for a bailout by Spain, and there’s nothing to suggest that it’s coming soon. This is very disappointing for market participants, which has led to a lot of “risk off” trades in the last few days.

Also note that yesterday’s PMI readings mostly came in worse-than-expected. PMIs are used to see where the economy is headed, so when they are falling, it also means that the economy is contracting.

Given the technical setup and the current fundamental landscape I have decided to place a sell order on EUR/USD at 1.3020. Here are the complete details of my trade idea:

Sell EUR/USD at 1.3020, SL at 1.3085 (above this week’s high), PT1 at 1.2920 (yesterday’s low), PT2 to be determined. 1% risk. Risk disclosure.

HLHB Trend Catcher


It looks like my HLHB Trend-Catcher 3.0 wasn’t able to mimic its performance from the week before as it produced some negative pips. Here’s a summary of all the signals generated as well as the corresponding results:

  1. Long at 1.3038. Closed at 1.3046 due to new crossover. +8 pips.
  2. Short at 1.3046. Closed at 1.3060 due to new crossover. -14 pips.
  3. Invalid buy signal since RSI was already above 50.0 the candle prior the crossover.
  4. Sadly an invalid sell signal since RSI was already below 50.0 the candle prior the crossover.
  5. Invalid buy signal since RSI was below 50.0.
  6. Invalid sell signal since RSI did not cross 50.0 from above.
  7. Long at 1.2992. Closed at 1.2961 due to new crossover. -31 pips.
  8. Short at 1.2961. Closed at 1.2970 when 50-pip trailing stop was hit. -9 pips.
  9. Long at 1.2974. Closed at 1.2974 when 50-pip trailing stop was hit. Breakeven.
  10. Short at 1.2972. Closed at 1.2933 when 50-pip trailing stop was hit. +39 pips.
  11. Long at 1.2937. Closed at 1.2922 due to new crossover. -15 pips.

All in all, the system generated a small 22-pip loss. While it certainly wasn’t a good week, it wasn’t a terrible one either.

Now, on to some good news…

EUR/USD Short


Indeed, good things come to those who wait!

I decided to wait for EUR/USD to pullback to the 61.8% Fib level and test the falling trend line before jumping in on the downtrend. My strategy proved to be a good idea as price soon dropped and hit my first profit target at 1.2920.

The fundamentals also lined up nicely to my trade idea. According to Pip Diddy, renewed concerns about Greece and Spain caused the sell-off in the euro.

I still have half of my position left open and I think I’ll keep it there until I see any catalyst that could potentially shift market sentiment. Don’t worry, I’ve already moved my stop to breakeven!

I hope y’all had a good week too!

XOXO,

Huck

Do you see what I see?? With price making lower lows and Stochastic making higher lows, I think we have ourselves a bullish divergence on the 4-hour timeframe of EUR/USD! But I’m scared of taking it especially with the ECB rate statement ahead of us.

Anybody brave enough out there to trade the pair?


Unlike GBP/USD, EUR/USD did superbly last week. Here’s a summary of all the signals that materialized:


  1. Invalid signal since RSI was already below 50.0 the candle prior the crossover
  2. Long at 1.3227. Closed at 1.3214 due to new crossover. -13 pips.
  3. Invalid signal since RSI was already below 50.0 the candle prior the crossover
  4. Another invalid signal as RSI was already above 50.0 the candle prior the crossover
  5. Short 1.3182. Closed at 1.3195 due to new crossover. -13 pips.
  6. Long at 1.3195. Closed at 1.3187 due to new crossover. -8 pips.
  7. Invalid signal since RSI did not cross the 50.0 level from above.
  8. Long at 1.3196. Closed when trailing stop was hit at 1.3250. +54 pips.
  9. Short at 1.3240. Profit target hit at 1.3040. +200 pips.
  10. Long at 1.3062. Closed due to new crossover at 1.3039. -23 pips.

Total Gain/Loss in Pips: +197 pips

Excellent gains again! The system really does very well in EUR/USD. Hopefully, it will continue to do so for the rest of 2013.


Unlike GBP/USD, my outlook on EUR/USD is very bullish. The pair, after trading within a very tight range, has finally broken out. It has made new highs and it looks like it’s poised to go higher.

I want to jump in long, but with the pair very far away from both the 100 and 200 SMAs, I think we could see a pullback soon. I’m going to watch this pair closely for a possible entry around the 38.2%-50.0% Fibonacci retracement levels.

Read about my take on the fundamentals on my blog: The Loonie Adventures of a Forex Noob

I mentioned in my Pre-Week Market Analysis on Monday that I was bearish on EUR/USD. I also stated that I was looking to short the pair once it pulls back to a higher price. I think the time has come to finally sell the pair!


As you can see, the pair has finally found its way to the 200 SMA and Fibonacci retracement levels. With the Stochastic showing that conditions are overbought, I think we’ll see price find resistance around the 1.3500 level. My bearish bias is also confirmed by the “lower highs” that the pair has been making.

So, once the pair tests the 61.8% Fib, I will pull the trigger and go short. I will place my stop at 1.3550, well above the 200-SMA and 78.6% Fib. I’m ultimately aiming for new lows, but I will take part of my position off the table if the pair tests the most recent swing low at 1.3360.

On the fundamental side of things, I think that the upcoming G20 meeting this weekend will be generally bearish for the euro. Forex Gump talked about how the shared currency seems to be in a tug-of-war with policymakers voicing out their opinions on its recent strength. In this silly little barista girl’s opinion, we could see the euro trade lower if the debates carry on further.

To recap, here’s my plan:

Short EUR/USD at 1.3490. PT1 at 1.3360. PT2 yet to be determined. Stop loss at 1.3550. Risk disclosure.

There ya have it! That’s my trade idea for today. What’s yours? Tell me all about it by writing in the comments section below, Facebook, Twitter, or Meetpips!

XOXO,

Huck

(Originally posted from my blog, The Loonie Adventures of a Forex Noob)