New Trade Alert: EUR/USD In Play

Last updated 11/12/2009 3:32 PM EST (GMT -5) 26 Comments

Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of future results.

Roger A. Stojsic

Technical Analyst, GFT

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Last Updated: 10 min ago

A rather unique EUR/USD opportunity is at hand. Prices are currently testing a freshly completed bullish butterfly and bullish gartley pattern confluence. This pattern also contains the more extreme 161.8% ABCD extesnion which means that if this pattern fails (stopped out at 1.4848) then we would expect a strong bearish continuation down to 127.2%-161.8% of XA. In other words, if the market breaks through this strong floor, then we can assume lots of bearish momentum. This is rather unorthodox as we typically look to enter off completed patterns, but in this case pattern failure seems more likely. I also wanted to use this trade as an example of how pattern failure can still lead to a solid understanding of what may mappen next, which is another of the many beneficial applications of these geometric patterns.

Potential strategy: Sell EUR/USD at 1.4849 with stop-loss at 1.4904, and targets at 1.4761 (T2) and 1.4684 (T2)

Comments (26)

Semaj
November 13, 2009 at 02:32 PM ET
Buy the dips & sell the rallies of an up/down trend is what they say. If you sell into an overextended move at the completion of a H&S pattern you're asking to be stopped out. A better approach here is to sell into todays rally if you are a believer in dollar strength. If taking signals from someone else you still need your trading rules to follow. Just a thought.
Semaj
November 14, 2009 at 09:59 AM ET
One more thought is the dollar index has to hold the 75 handle, but if it takes out 76 then we may see a small dollar rally.
FXDragon
November 12, 2009 at 04:06 PM ET
Buying at supports also recommended while taking profits down the stairs. Rangebound 1.50-1.47 rollercoaster till December;)
Good luck...
FXDragon
November 13, 2009 at 03:56 AM ET
Im a little concerned about the stop side of this trade. Ez gdp should be good. 1.4960 stop looks better to me to be on the safe side.
rstojsic
November 16, 2009 at 11:07 AM ET
"cut losses quickly, and let profits run."
FXDragon
November 13, 2009 at 08:37 AM ET
Im out. I dont believe its gonna materialize. I see warning signs. I'll stay long above 1.4850. Good luck...
FXDragon
November 13, 2009 at 04:07 PM ET
I would buy and sell between 1.48-1.50 till December at least.
Take care,
Semaj
November 13, 2009 at 04:51 PM ET
IF 1.4950 is not tested & we take out the low from yesterday, I have 1.470ish as a near term target low off a fib projection. If we test 1.50 & it holds then I see 1.480ish as near term support. I am short from 1.5020 currently with a target of 1.4755.
Semaj
November 13, 2009 at 09:34 PM ET
It's definitely not a typical trade for me, I'm just am trying to play a daily double top, lower high divergence setup. If price moves above my 21 EMA on a 4HR chart I'm out. I realize the daily uptrend is in tact currently without a lower low and the trendline from March still not breeched. Would be a nice one though, right? I also have the inverse trade going with the Usd/Chf. Thanks, good luck to you as well.
Semaj
November 14, 2009 at 09:40 AM ET
I have taken some profit and I am a zero stop loss, & yes I am looking for the snb to step in before parity. When I counter trade it is a smaller position. Technically speaking the market failed to push higher on it's last attempt, I see divergence, and that is my play. It's not like me to swing for the fences but sometimes a home run is nice. I traded a similar setup on the gbp/usd when it sold off in Sept. from 1.67 down to 1.58. using a fib projection that hit my target exactly after a 5 wave elliot completion from March. That trade I nibbled on periodically & realized if I took one position I would have done better than in & out with some losses on the way down. I don't trade the aud/cad so i am not familiar with that 2top failure. I do appreciate the feedback and I am not over confident at all since I have been chewed up & spit out by the market many times along the way, thanks again for the input. BTW what is smt? Enjoy the weekend.
FXDragon
November 13, 2009 at 07:24 PM ET
If you wait for 4755 on all your positions, then you run the risk of getting nottin if it goes back up 50. Im short from 50, took profits on 4850 and started buying again. Because i just dont believe it will go much deeper south, and if it does i would still buy supports. Good luck,
FXDragon
November 14, 2009 at 03:44 AM ET
I wouldnt rely so much on that 2top. Remember the last 3top audcad recommendation? i believe this one has the same fate. Considering taking early profits on some of the same positions doesnt hurt. I can tell you'll definitely hit your target though if it doesnt shoot up to 52 in 2 weeks. My philosophy is: if you have to do too many calculations to take a trade, leave it:) Read yourself and see how you try to make yourself believe in smt. Its like a religion almost:) But trying to make exact calculations is a make belief pseudo science. Noone knows where the price will go.

Take care,
FXDragon
November 14, 2009 at 03:48 AM ET
One last thing: the markets are always right and rational after all...
FXDragon
November 14, 2009 at 04:36 AM ET
Analyzing again, i wouldnt stay long usdchf for too long either. Unless youre going for snb intervention, which is not far off by the way especially on eurchf. Why are you counter trading anyway. Just open 2 on eurusd, take profits halfway on one, and swing target the other if you have to. You remind me of my early trading days way back:))
arapahoe
November 13, 2009 at 12:32 PM ET
wow, this one left a mark... didn't take long either. Ah well, that's why we use proper money management and go with the long term odds. Sometimes the best looking ones hurt the worst!
rstojsic
November 16, 2009 at 11:08 AM ET
well said
Doobp
November 13, 2009 at 07:30 AM ET
if that's the case, I think this trade is invalidated?
Doobp
November 15, 2009 at 09:29 AM ET
actually i do go for extended trades like this one. if i do, i go on tighter stop loss. i was on long instead of the suggested short. haha. =)
zaidi
November 13, 2009 at 04:29 PM ET
i dont see a downfall from 1.48500 for another 3-5 days...i will still prefer Long around 1.4830
DiamondCha
November 13, 2009 at 01:51 PM ET
Roger and Co - you guys should really give up your day jobs - your performance has been abysmal - do you guys know what you are doing?

Arapahoe - "proper money management" is not acting on these guys views
rstojsic
November 16, 2009 at 11:56 AM ET
Interesting choice of words indeed, DiamondCha. I'm curious as to what exactly you are basing your assessment on?? Would you be so kind as to provide some evidence in how you came to this conclusion? For example, are you basing your judgment on winning percentage alone, or a combination of winning percentage and risk vs./ reward as we have written about countless times (as have many other professionals over the past several decades)? How many trades are basing this on exactly? I would only assume that after making such definitive statements that you will be able to back your comments up with some facts vs. simply opinion. For example, looking back 7 of my last 11 rec's have been winners (assuming you count the AUD/CAD that was stopped out at break even as a win---I believe there were quite a few readers that came out profitable). I assume Brad’s results are similar on an overall basis. Of course, winning percentage alone is meaningless especially when looking at such as small number of trades. I only hope you would agree with this common belief as would any serious professional. We've written several articles dedicated to this common technique/philosophy…my "risk management guide for technical recommendations" as well as brad's "trading psychology" articles may enlighten you. I would recommend you read these as they are crucial to success within not just this specific methodology, but trading in general. I would also expect that you perform due diligence by reviewing previous trades, doing the math, and focus on profits vs. wins/losses before passing judgment. Nothing is more important to me than the ethical and moral responsibility I have for all our readers most of which seem to understand that trading is a numbers game and success/failure never comes down to a few trades and certainly not winning percentage alone (this is only the 2nd negative comment we've received since the inception of fx360 over 9 months along with hundreds of trades). I am confident that you will feel otherwise especially when looking at overall returns vs. simply winning percentage alone. In order to have any hope of success in the long run, traders simply must understand the importance of consistent risk/money management. In fact, I challenge you to provide evidence to back up your claims. I eagerly await your reply.
rstojsic
November 16, 2009 at 11:58 AM ET
Due to NFA regulations we can only show 30 days worth of closed trades at a time, otherwise it’s considered keeping a “track record” which we’re not allowed to do, unfortunately.
Doobp
November 15, 2009 at 09:26 AM ET
do u trade? i guess u either dun trade or u dunno how to trade.
m.hollingshaw
November 16, 2009 at 12:00 AM ET
Abysmal A*bys"mal, a. Pertaining to, or resembling, an abyss; bottomless; unending; profound.

Interesting choice of words.

Roger and Brad,the list of recent trades used to be quite a bit longer, is there some system by which is shortened? If so, is there a place to find the...archives?
m.hollingshaw
November 12, 2009 at 04:05 PM ET
Is this invalidated somehow? I just don't see it listed on your trades of any kind.
rstojsic
November 12, 2009 at 04:11 PM ET
it's under trades in progress (you may need to refresh).

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QUOTEBOARD

  • Key Quotes
  • Currencies
  • Markets
  •  
  • current
  • high
  • low
 
  • EUR/USD
  • down
  • 1.3614
  • 1.3739
  • 1.3586
EUR/USD
5 min chart
  • GBP/USD
  • up
  • 1.5252
  • 1.5327
  • 1.5216
GBP/USD
5 min chart
  • USD/JPY
  • up
  • 90.43
  • 90.79
  • 89.75
USD/JPY
5 min chart
  • OIL
  • up
  • 81.98
  • 82.74
  • 81.77
CLJ0
5 min chart
  • GOLD
  • up
  • 1127.2
  • 1127.6
  • 1118.0
.GOLD
5 min chart
  • US Stocks
  • up
  • 10742
  • 10769
  • 10704
.US30
5 min chart
  • UK Stocks
  • up
  • 5636.0
  • 5662.3
  • 5613.3
.UK100
5 min chart
  • DEM Stocks
  • up
  • 6010.3
  • 6039.8
  • 5995.8
.DE30
5 min chart
  • JP Stocks
  • up
  • 10766
  • 10843
  • 10706
.JP225
5 min chart
  •  
  • current
  • high
  • low
 
  • EUR/USD
  • down
  • 1.3614
  • 1.3739
  • 1.3586
5 min chart
  • GBP/USD
  • up
  • 1.5252
  • 1.5327
  • 1.5216
  • USD/JPY
  • up
  • 90.43
  • 90.79
  • 89.75
  • USD/CHF
  • down
  • 1.0618
  • 1.0646
  • 1.0540
  • USD/CAD
  • up
  • 1.0127
  • 1.0142
  • 1.0088
  • AUD/USD
  • up
  • 0.9197
  • 0.9233
  • 0.9179
  • NZD/USD
  • down
  • 0.7141
  • 0.7174
  • 0.7118
  • USD/MXN
  • down
  • 12.4712
  • 12.4866
  • 12.4250
  • EUR/JPY
  • up
  • 123.12
  • 124.21
  • 122.64
  • GBP/JPY
  • up
  • 137.92
  • 138.55
  • 137.00
  •  
  • current
  • high
  • low
 
  • OIL
  • up
  • 81.98
  • 82.74
  • 81.77
5 min chart
  • GOLD
  • up
  • 1127.2
  • 1127.6
  • 1118.0
5 min chart
  • SILVER
  • up
  • 17.457
  • 17.542
  • 17.307
5 min chart
  • US500
  • up
  • 1162.4
  • 1167.4
  • 1160.6
5 min chart
  • UK Stocks
  • up
  • 5636.0
  • 5662.3
  • 5613.3
5 min chart
  • DEM Stocks
  • up
  • 6010.3
  • 6039.8
  • 5995.8
5 min chart
  • JP Stocks
  • up
  • 10766
  • 10843
  • 10706
5 min chart
  • AU Stocks
  • up
  • 4851.0
  • 4873.5
  • 4837.0
5 min chart
Data source: GFT

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