This Trade Was Closed January 6, 2012
The limit was hit at 1.2750 this morning, which is pretty good considering market conditions. 320 pips for a week’s “work” is not too bad.
Based on my current projections, I would not be surprised to see the EUR/USD near 1.25 in the next two weeks, however, I am not willing to hold over the weekend when the ECB may try to surprise the market.
Original Trade Post:
The breakout to the downside was very encouraging and I think the current pennant that is appearing on the EUR/USD looks like it is approaching a likely apex/breakout level.
Although the market has been surprisingly soft over the last few days, I still feel that risk is strongly biased to the downside. With stocks at resistance and yields in the Eurozone getting higher – I like the prospects for this trade.
Forex Trade Details:
| The Pair: | EURUSD | 4.0 (4 votes) |
|
| The Trade: | Sell Short at 1.3070 pips | ||
| Target Price: | 1.2750 pips | ||
| Stop Limit: | 1.3170 pips | Trade Closed: | January 6, 2012 |
| Take Profit: | 1.2750 pips |
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19 Responses to Short EUR/USD pennant
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Hi John – thoughts on a Eur/Usd short squeeze? http://allstarcharts.com/another-record-number-of-euro-shorts/
I think it is possible. I was just talking to some traders about that very thing on Friday. I am not ready to call it yet – but they are extremely extended on the short side.
Hi John – changed your view on the direction of the Euro yet or still bearish?
Its getting harder to be bearish. I am still holding back on re-entering this trade of course but it could still be interesting up around 1.3220
Hi John – short squeeze is in play in the euro. Are you in the euro bear camp?
I want to be. – Does that count? I have been quite a bear in the recent past but I don’t think I can take a position that direction at this point. Or at least not yet.
Congrats on both entry and exit! I especially like that you are so disciplined. I think when a trade becomes “too obvious” it is about time to bag it (shoeshiners etc).. And by now short-euro has spilled well into mainstream news.
LOL – yeah I agree. I might take it again if it shakes out some of those late shorts and gets back to resistance.
Happy new year! John, I’m wondering if we could possibly see the euro head lower, but still see the sp500 go higher. Thinking along the lines of markets that have been highly correlated like weak dollar = rise in gold, which have recently broken/weakened in correlation strength. us markets may be able to break free from the weak euro (zone) in January if some of the us economic data continues to show improvement. Maybe a pair trade of short the euro/ long the spy could be profitable?
Yes I think that is quite possible. The rate at which the ECB is likely to have to print Euro could easily outpace the Fed and lead to these indicators disconnecting. I think that is possible even in the short term.
I read an article by Factset today about Dividend paying stocks being the most likely to “express” economic expansion this year since bellweather tech stocks seem to be slowing down on growth (i.e. Oracle). Any tips (or LM videos) that you recommend to identify companies growing cash flows, a history of increasing dividends, and other important criteria to look for in such companies? I’d like to start with a list of companies that I can then filter down by technical attractiveness. here’s a link by one member at Scottrade community explaining how she uses the “Gordon Growth” model to identify companies that are like this – but i can’t make heads or tails of it because it’s quite involved. thanks as always!
http://community.scottrade.com/forums/viewtopic/1/75096?post_id=132564#p132564
Well – I would have to think about that but I have one called “turbocharge dividends” that kind of addresses that question. I am actually a big fan of dividends in general for several reasons and did a special Ask the Expert on it several weeks ago again that you could check out.
Perhaps your specific question is a good topic for tomorrow’s Ask the Expert webinar?
hey John, nice trade!! Looks like you’re cleaning up. Always nice to have a winner…
Yeah talk about good timing (if I say so myself). Makes me feel a little better about being spanked by IV in JP Morgan.
Nice pick John. I coincidentally went long the FXE March 29 Puts at $3.55 today. The break of the 1.29 level is significant. Note the VIX is also spiking higher today so I think that all “risk off” trades are picking up steam heading into the new year. Would not be surprised if money managers are buying up puts to protect any profits they have garnered in December
Terrance – how did you do? I just closed my short position here so I wanted to check in with you on yours.
Hi – I am still long the MAR 129 puts, currently trading at 4.35. Good advice on ECB intervention over the weekend. I will look to close today as well
What a day in the FX market!
I have read the news feeds up and down, but I dont think any of the headlines can give a reasonable explanation for the sudden intraday rally in the USD, today. I rather think everything just clicked into place again. Congratulations on the stone cold anaysis, simple and effective! Chris