Trade Idea: 2012-11-22 23:10
Sometimes, the signals line up so nicely that you have no choice but to take the trade. That’s exactly what we’ve got on EUR/AUD!
After topping out at 1.2400 yesterday, the pair is now in the middle of what looks like a technical retracement. Not only is the pair approaching a rising trend line on the 1-hour chart, but it is also about to test the 50.0% Fibonacci level as well as potential resistance-turned-support at 1.2350! With Stochastic about to hit oversold conditions, I think we could see buyers look to jump in at that level as well.
Just a like a bowl of bunny ears, how can I say no to this setup?!
My only concern is that we’ve got a bunch of manufacturing and service PMIs headed our way later during the London session. Depending on the results of these reports, it could either make-or-break euro price action today.
In order to limit my exposure to potential volatile moves, I’ve decided to limit my risk on this trade and put only 0.50% of my account on the line.
Buy EUR/AUD at 1.2350, stop loss at 1.2320, take profit at 1.2400.
I’ve decided to go with a tight stop loss because if price does hit that level (and in the process, break the rising trend line), chances are that we could see EUR/AUD sink to new lows. As for my profit target, I’m not being too ambitious, setting it just at the previous high of 1.2400. Besides, this still leaves me with a reward-to-risk ratio of about 1.67:1, which ain’t too shabby for a day trade.
If you’re lookin’ to join me on this one, lemme know how you plan to manage the trade by posting your comments below! Good luck, everyone!
