[TW] 7-2-2012 - EUR/CAD Short by mero koli

Currency Pair: EUR/CAD

Time Frame: Daily chart , 4-hour chart

Long or Short: Short

Entry Point: 1.2920

Stop Loss: 1.3010 (Above round number 1.3)

Profit Target/s: 1.2780 (Near last swing low)

Reward-to-risk Ratio: 1.56/1

Risk percentage:

Indicators used: Trend Line , Slow Stochastic

Trade Rationale:

* Fundamentally : Although the EU Summit results were relatively good , 120B Euro growth plan and direct bank recapitalization but that doesn’t change the situation for EZ I mean structurally nothing has really changed and it always takes time for these measures to get implemented .Also with expectations of rate cut decision in ECB meeting next Thursday .I think Euro will move lower next week . On the other side the last data released on Friday showed that the Canadian economy expanded at a faster pace than expected in April printing 0.3% mom growth and 2% yoy . Based on weak/strong analysis i think it is time to short the pair.

*Technically : On Daily chart the pair is testing the down trend line from April and also stochastic has cleared the oversold condition opening the door for more down move in coming days.
On 4-hour chart there is bearish divergence which confirm the trade idea.

Trade Adjustments: I will move my stop to BE when I am up 90 pips.

So what do you think ?

Nice set up. Will try it !!!

Your sl move to BE at 90 pips is idiot.
So if you’re up 70 pips you are still willing to lose on the trade?

The trade idea is based on daily chart not inter day trade and my initial sl was 90 pip … so i didn’t want to get stopped become some fluctuation or the week gap … anyway that adjustment wasn’t need become the trade worked exactly like i predicted and my pt get hit +140 pip

EUR/CAD was in a strong and consistent downtrend during the recent weeks that sellers were successful in obtaining the lowest price of 1.40092.According to the formed movements in the previous week, there is a Spinning Top candlestick pattern which shows indecision marker for ascending or descending and there is a warning for stopping of more descending.

As it is obvious in the picture below, between the top price of 1.44540 and bottom price of 1.40461 there is AB=CD harmonic pattern with ratios of 50 and 161.8 that warns the potential of ascending from the D point of this pattern. Indicator RSI is in saturation sell area which confirms the created bottom price and warns about increasing of price. Generally according to the current situation, until the bottom price of 1.40092 is preserved, there is the potential for ascending of price and reformation of descending trend.