Another nice week for me and hopefully for all of us as well. There is not much action from the EURUSD through the week except on Monday and Friday. On Monday (16 Aug 2010), the price broke 1.2740 and closed or second trade at take-profit. The price then reversed and almost took us out of our third trade (3 times to be exact on Tues, Wed and Thur). Our stop-loss held on and on Friday, the price broke the mid to short term up trend resistance line (in blue) and also the 1.2740 and closed at 1.2710.
I adjusted my stop-loss again last night to 1.2900 to lock some more profits for the third trade. Currently my closed P/L has 763 PIPS while my opened P/L has 356 PIPS. I have locked-in about 170 PIPS for my third for EURUSD.
Let me now try to review and project for the coming week.
EURUSD
The EURUSD had broke the short to mid term up trend resistance line (in blue) and the 1.2740 resistance line. I am still on the belief that there is a possibility that this retrace could be a huge one taking out the entire rally from 07-Jun-2010 at 1.1875. As such, I would hold on to my last trade and hope that this retrace will unfold itself and take out the entire rally hitting 1.1875.
I am actually looking to add on to my current position if the price break the 1.2720 - 1.2740 with strong price action indicating a breakout to the down side. One trade setup will be to place a pending long entry at 1.2650 with stop-loss at 1.2730 and take-profit objective open. The second trade setup is to wait for the price retrace back to 1.2740 before entry. An entry at this price value will provide a better risk to reward ratio.
Placed your orders only when the market open on Monday (after 0000GMT). It is not advisable to trade on a sunday when the trade volume is low. The other reason as to why I would not trade on a sunday is the gapping of price after the market reopen after a weekend.
USDJPY
The USDJPY is getting deeper and deeper into the wedge formation I mentioned yesterday. When the price eventually breakout to the upside, I will expected the move to be a great one. Of course, I would not rule out a break to the downside, (In the long term outlook, the USDJPY is still in a bearish trend) therefore, a break to the downside will look to to a continuation of a bearish move.
There is no clear direction for the short to mid term outlook of the USDJPY.
I would look to trade long if the price is able to break the wedge and close above 85.80 - 86.00. The area of take profit might be around 88.30. Stop-loss could be placed around 84.70. I will normally employed a 3 stage take-profit trade strategy and 88.30 might be my first stage.
Another trade setup will be in line with the long term trend of the USDJPY. That is to short the pair on the break of the downside of the wedge. But, I am not actually looking forward to trade that setup now as I am on the view that USDJPY will break towards the upside.
Have a nice and happy weekend....
Linear Mode
