Trade Idea: 2013-02-12 03:15
I’ve been waiting for this moment for a while now, so I didn’t hesitate to sell EUR/GBP at market once the signals lined up!
After EUR/GBP had formed a double top formation with lower highs, I had begun to develop a bearish bias for the pair. I figured it was a only a matter of time before this sucker traded lower, and lo and behold, price broke down below the .8560 neckline on Thursday, thanks to Mario Draghi’s remarks on the euro.
I held back from selling the initial drop because I wanted a better price and reward-to-risk ratio, so I sat on the sidelines and waited for this pair to retrace its footsteps. Now, it’s right where I want it to be - in a confluence zone! It’s go time, baby!
Sold at market (.8551), stop loss at .8620, profit target at .8450. Risked 0.5% of my account.
I sold in this area because we have a cluster of inflection points here:
[ol]
[li]The 50% Fibonacci retracement level
[/li][li]Former neckline support
[/li][li]Approximately 1 full ATR from the week open
[/li][/ol]
Aside from that, we got one more sign of confirmation from the spinning top that formed right in this area.
Fundamentally, I think this trade makes sense, especially since the euro has come under renewed selling pressure after Draghi expressed concern about the euro’s strength late last week. Aside from that, political issues in the euro zone have reintroduced uncertainty, which I think should cap off the euro’s gains for now. Overall, it seems to me that the shared currency still has a bit of room to fall, considering how long and extended its recent rally has lasted.
What do you guys think of this week’s trade?
