04 Jul EUR AUD Revisited for 2nd Swing Short; 4th July 2013
Having closed the previous EUR:AUD swing short for a quick profit the time has come to take another look whilst price continues to struggle against Daily resistance.
The MACD negative divergence has now confirmed itself and price breaks above the 1.4270 level appear to attract selling pressure. I was so close to entering short last night but at that time price was above 1.4270 and looking lively so the decision was made to wait until today. Price did drift lower overnight and my entry wasn’t at the best possible levels but it turned out to be good enough.
Here’s the 15 minute chart from which the short entry was made at 1.4237 just as price failed to find support from the green 200 MA:
The trade was opened with a 200 point stop loss well above the existing high and I’m yet to lower this following today’s fairly low volume price action. The main sell off that occurred today was following signals given by the ECB that it would continue to loosen monetary policy, which is quite the opposite to signals given by the FED in the U.S.
Although there’s still a possibility today’s sell off will be recovered and the trade stopped out, the Daily chart shows a better picture of resistance at the 1.4270 level alongside negative MACD divergence which formed at the price highs:
Although at 200 points the risk on this trade isn’t small, I believe the potential reward from a sell off to the mid level of the 2 Year trading range at 1.29 makes this a trade well worth taking the risk for. Although if you know me you’ll know I’ll probably close the trade well before such levels are seen!