The market ended bullish and USD bearish prior to Christmas. This morning USD is still weak against the major currencies. On the EUR/USD hourly chart, I saw the retracement indicated by default MACD as it turned negative while long MACD remains positive. The formation of a bullish hammer gave extra confidence for the trade. There is also a nice cup pattern. I saw the opportunity to long the pair.
All trade conditions were met except 1) 4 hour stochastic was not pointing at the uptrend direction. 2) there were 2 daily resistance levels within 20 pips. One was the 10MA and the other is a Fibonacci level. I did not realise until teacher pointed out to me. Hence, the risk-reward ratio is very low.
Market was still kind to me as the Asian markets were bullish. The pair begin to breakout the resistance levels. The movement of the pair is limited which may be due to the low trading volume (Australia, Canada and UK on trading holiday).
The first adjustment of stop loss to 1.4351 (today’s low) was made after the price broke the day’s high.
I manually closed the trade with a 12 pips profit as I was not able to monitor the market further. I was lucky to get off a small profit since it is a trade that should not have been made.
Trade details:
| Currency Pair: | EUR/USD |
| Method: | Retracement Continuation |
| Global Stock Market: | Bullish |
| Date & Time of Entry (GMT): | 27/12/09 11:43pm |
| Entry Price: | 1.4375 |
| Critical Level: | Weekly PWP not formed yet |
| Initial Stop Loss: | 1.4328 (47 pips) |
| Basis of Stop Loss: | Low of last trading day |
| Initial Target Profit: | 1.4420 (45 pips) |
| Basis of Initial Target Profit: | Resistance on daily chart |
| No. of contracts traded | 1 mini |
| Planned Risk-Reward Ratio: | 1:1 |
| Stop Adjustments: Price and Profits Protected | 1.4351 (-24pips) |
| Exit Price: | 1.4387 |
| Exit Time (GMT): | 28/12/09 6:08am |
| Reason for Exiting the Trade: | Manually closed. Not present to monitor |
| Profit / Loss (Pips): | 12 pips |
| Actual Risk-Reward Ratio: | 4:1 |
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