I have been playing it save this week as I was a not sure what Memorial day would do for liquidity. My cautiousness may have led to blindness, because I totally missed out on another perfect setup on Brent Oil. The third last bar in below chart formed on Memorial day. I found it a bit small, but it was a pinbar that I could trade according to the method I use. Anyway I had doubts about the trade due to the off-day for US banks. And when in doubt, I do not trade. So all in all it looked like a good decision until I saw today’s sell off.. Oh well, you cannot be in all trades and there will be more to come.
Brent Oil selling off
Then something else happened. My entry order did not get filled on the USDJPY today. Why? you might ask. First let’s look at the chart.
USDJPY not entered
First of all I never enter at market, but always by limit order. I place them with stops and TPs, but also with bounds. These bounds are the level of slippage I am willing to accept in order to get filled. In “normal” moving markets (no news events) and with enough liquidity entering with a 3 pip lower and upper bound works. So what happened is that my entry level was reached right when Mr Draghi, President of the ECB was presenting some report and at the time that both US and Japanese banks where closed. So I checked the recent spreads at my broker Oanda and saw that right at that moment spreads are usually 1,5 pip higher then that they are throughout the rest of the day for this pair.Below is a snippet of spread graph by Oanda. The big block is the weekend, when spread moves up to 10 pips as markets are closed. My entry got triggered when spread “peaked” at 2,5 pips on Wednesday 30/5, while most of the time the spread is around 1 pip.
Earlier today I posted my analyses on shorting the EURUSD. Below are some conditional orders I just placed. And looking back at them I see a consistent pattern and that is: Short the Euro. Long the US Dollar. I am not gonna explain below charts, I just put them up as a reference. Let’s see by the end of the week how things played out.
Will the EURO be falling of the proverbial cliff this week? I’ll share my analyses in a minute. First let’s look back at how I did last week.
I only got into one trade last week: on Brent Oil. Most of the currency pairs I follow did not have proper trade setups. And the other that did, did not trigger my entries, because price did not retrace (enough) before moving in my direction.I was tempted to short the EURUSD. That would have been profitable, but not inline with my tradingplan and therefore way to risky. And I am not here to gamble, I am here to manage risk first and then look at possible returns later. So in that sense I am quite pleased I did not short the EURUSD. So let’s look at the one perfect setup I did trade.
Brent Oil – Perfect setup
Brent Oil is behaving perfectly lately looking at it from a price action perspective. In week 20 there was a pin bar with trend setup and this week an inside bar setup with trend. I placed my stop just above the mother candle and then targeted two times my stop distance for taking profits.
EURUSD back to 2010 levels?
EURUSD – back to 2010 levels?
The EURUSD has broken the 1,2500 level last week and closed just above it. I had to look back at May – June 2010 to find the next down side S&R levels at 1,2150 and 1,1864. I looked all the way back to 2006 and could not find any significant other levels in between. So if price moves below the 1,2500 level again there is a good chance price will move down rapidly to the 1,2150 level. Friday formed a bearish pinbar between the 1,2625 and the 1,2500 level. This signals serious downward momentum in a down trend while there is serious downward potential! Below is a closer look.
EURUSD – a closer look
My only concern for entering this trade is the fact that US and some EU markets are closed coming Monday. This will mean poor liquidity in the markets, which could lead in best case to not much price movement and in worst case could lead to some erratic price behavior. I’ll take this into account by placing my stop not to tight. I will also try to manage this trade. I will probably move the stop to break even once I am 1R in profit and then see how far this ride will go.