EUR/USD, EUR/GBP, GBP/USD trend trading

Jun 1, 2008
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#1
I will keep track of my trades in this journal in the interest of keeping a historical record and hopefully to receive some good input from other experienced traders. In a year of forex trading I have had the most success on medium term trend trades with the Euro, cable, and swiss, so I am going to stick with them. Asian finance is an animal all its own, so I prefer to leave that to them and do what I understand. Trichet's central bank policy makes sense to me, while Bernanke is trying to destroy our country as fast as possible, so I tend to be long on the euro more often than not. When I feel the euro is overextended, I will either sit it out, or short the EUR/CHF. I prefer to buy retracements rather than breakouts. I am being mentored on some of my trading, but I will refrain from telling which trades are which to protect his signals. So I can't take full credit for all the wins, but its a nice bonus to be winning while you're learning, right? I've learned a lot, especially about market psychology and gut feel. So, without further ado, I will begin posting trades, along with my reasons for taking them. Feel free to comment on them and point out some technicals I may have overlooked.
 
Jun 1, 2008
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#2
First trade

This trade was taken on retracement to 1.5500 after a wedge break. There was a decided bullish candle that closed outside the triangle at the end of the week, and very strong support at 1.5450 and so I bought at 1.5500 with a 100 pip trailing stop. I added in at 1.5700 on two euro-bullish news items and strong price action. Price flagged at 1.5800 so I moved my stop to 1.5750, where it triggered. Net 300 pips.
 

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Jun 1, 2008
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#3
Trade 2

My next buy was at 1.5700, as price was still buoyant, and it went my way for about 50 pips, then dropped like a rock on bad news. I then got in again where I was stopped out after it went a ways past my stop, but then it dropped hard and I exited manually after losing eighty pips.

W/L: -130
Net: 170
 

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Jun 1, 2008
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#4
Upcoming potential trades

Ok, after a bullish uptick after the end of the week, I am liking a buy at 1.5500 on the EUR/USD just like two weeks ago. Also, there is some pretty hardcore resistance on the GBP/USD at 1.9840 that could be worth shorting as well. But my favorite setup of the week is going on with the EUR/GBP right now. My gut says that risk aversion will hit the markets again this week, and my bullish EUR outlook and bearish GBP outlook spell a spike in the EURGBP, and it could even go my way if I'm half-wrong, haha. EG is hovering on a third touch above a daily trendline that I believe will provide strong support. I will buy with 4% risk at market .7845 when it opens on Sunday with a 50 pip trailing stop. If I prove right on risk aversion and my Euro outlook, I will add in up to .8000. It'd sure be nice to have a heck of a position on if it breaks out to the upside, wouldn't it? :)
 

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trader_dante

Well-known member
Aug 18, 2005
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#5
Interesting how we all have different perspectives. I am very bullish on Cable right now.

I think there are several solid reasons to go long from the daily TF including:

1) An ascending TL along with;
2) A retest of a descending TL (see chart 1)
3) A 38 fib retracement of the recent swing low to high (see chart 2)
4) A significant support resistance/pivot a little lower down
5) Price action shows long tails on the daily candles as priced has rejected lower levels for several days
6) The opening gap lower gives a good reason to go long as these gaps get filled a majority of the time.
 

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Last edited:
Jun 1, 2008
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#6
True, some of the technicals seem to be bullish for the cable, and it might go up in the short term, but overall, it feels kind of heavy to me. If I traded the 1.9840 resistance short, it would be with a 25 pip stop and 50 pip target. I'm not ready to actually short the pound against the dollar, but I would against the euro in the setup I mentioned earlier, as I believe the pound will weaken against the euro in the next couple months. The weekly cable chart is decidedly bearish and appears to be turning over. I am anticipating new risk aversion this week, but if it doesn't happen, I'll revise my outlook. The market perceives cable as highly exposed to subprime fallout, and I don't think we've seen the last of that. I might switch to a bullish medium term outlook on cable if it could close above 2.0000 on a daily chart. I am doing position trades, so I am looking to build up a position in EUR/GBP. If it isn't happening after a couple weeks, I'll step back and take another look. Thanks for your input, I hadn't noticed those long tails, and they are significant.
 
Jun 1, 2008
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#7
EUR/GBP movin'

Well, the EUR/GBP trade is playing out like clockwork. I got in at the market at .7885 with a 50 pip TS and market is now at .7900 after making a new high of .7927. Pound fell back inside a bearish daily channel after three bad news items came back, and now only the 50% fibonacci level remains to stop a retest of 1.9400. Meanwhile euro is hitting very significant resistance at 1.5500, and I am expecting a bounce there. I'm happy with this trade, and looking to add in once I'm sufficiently in the money. I'd like to be well-loaded before .7950 for a test of .8000. If that breaks, I'll reload for .8200.
 

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Jun 1, 2008
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#8
Well, the EUR/GBP did exactly as I thought it would. GBP weakness hit, but unfortunately, Bernanke's comments shook me out of the trade for a 6 pip loss. Then it proceeded to rocket up on ECB comments and a .5% unemployment rise. ARGH! :mad: Such is the life of a trader. If I were to do it over again, I would tighten the stop before the news just in case to protect some of my profits, and look for a reentry after the dust settles, if the news didn't change my overall outlook. I could have saved 40 pips and reentered on the positive ECB news and bullish candle at the lower trendline. I also had a small buy on EUR/USD from 1.5510 that was stopped out at 1.5520. After the NFP's on Friday, I am solidly bullish EUR/USD and I bought at 1.5763 with 100 pip TS. I am looking to add onto the position up to a test of 1.6018, including a buy stop at 1.6043. I will pyramid the position to 1.6018 risking the profits that I am already in the money on, taking no new risk beyond the initial trade. I am looking for a solid break to 1.6500 or higher.
 

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