EURUSD Daily Surprise Box and Dual Trend Lines – Closed

22Sep08

September 2008: Wow – this was one heck of a call. I missed most of the move because I thought I missed the break initially. Looking back with 20/20 hindsight this was one of the trades of the year. As I write this, the pair has retraced back to the 62 MA on the daily which is at 1.4888 after reaching a multi-year low of 1.3880. Once the U.S. market shock works its way out of the system, I will be watching for a break downward again. I am very cautious nearterm due to recent and expected volatility as we deal with the banking / mortgage/ credit/ economic crisis in the u.s. Long term I think there is a strong arguement for the pair to fall below the most recent low. This time I will be taking very small probing possitions until I catch the eventual trend down again. Or we hope!

24July08 Late Asian Session

EURUSD Daily and Weekly charts show an interesting range that form a perfect Surprise box. This is a large timeframe for a surprise trade, but really shows the range this pair has been trading in. Add to this a recent break downward and two long standing Trend Lines and we have a large potential short trade setting up. This is really a continuation trade of the EURUSD trade I entered on July 23rd and closed earlier today. I have a probing position on now that I opened after a bounce back to the 800 on the 60Min chart. This may take a few entries to catch the ride down. I am not planning on risking much on my probing entries. If I catch a trend I’ll add to it.

UPDATE 25July08Pre US Open: I had two probing possitions on. The pair reversed and traded through the 62 and has almost touched the 144. One of my possitions closed. I am keeping a single possition on and raised my SL to 10 pips above the 144. If this gets taken out that will be the last attempt for this week and I will again be in watch an wait mode. I am not willing to take a large SL possition on this trade over the weekend right now even with a small possition. Too much going on politically and I don’t want a surprise gap! I’d rather take a few small probes and wait to catch a run down when it eventually happens. Which it will at some point – 1 day, 1 week, 1 month, 1 year… As I tell my wife, trading is really simple, it either goes up or goes down, I can’t tell you which way it will go, only what I will do when it does.

UPDATE 25July08 Mid NY Session: the pair expectedly rose at the European close, then fell again below the 800. I put a tight stop with a continution profit target to the nearest SR line. The pair rose quickly to the 62 on the 60M and I am now out of this trade for now. My last probing entry was profitable around 60+ PIPS. The overall setup remains valid and on my watch list but I do not want to be exposed over the weekend. I don’t like paying interest either unless I am deep in the money with a good trend catch.

UPDATE 29July08 – as we enter the Asian session, you can see that the long term trendline is being hit. I am now watching for either a bounce or a break below. If we break below, then we may be ready to start a new trend. With so much fundamental news these days, any longer term position entry will be probing (small) and again, I’d rather take a few small losses until I catch a trend than one or two ill timed wrong ones!

Update 31July08 – took a few probing trades the past few days. Thought I finally had the trend and got stopped out due to new this morning. Once the dust settled, I re-entered the trade and added to the position thoughout the day. Took half off just before the Asian rollover and have a tight 15 PIP loss in case the Eurpean session retraces the move. I don’t normally keep trades open over the weekend and tomorrow is Friday, so either way I will close this trade out for the week.

Update 1AUG08 – Friday morning NFP report and some other news announcements are expected. This trade held a very tight range overnight in expectation of the data release. I closed the remaining 2 possitions out around 7:45. Good call as my stops would have been touched during the news release spikes. The pair eventually settled back into it’s previous range. Trade on hold for the weekend. I’d like to see a break below the most recent low before re-entering. I will also consider an entry below the 62 on bearish candles on the 1 hour.

See Multi Timeline Charts Below: