Entered 2 new swing positions today, a EUR:GBP short and a EUR:USD short which I’ll discuss here.
Just to get things straight, this position is risky, has low probability of being an instant winner, and goes against short term retail sentiment which is incredibly bullish right now.
However if the main trend is still to remain down, todays short entry into strength marks an appropriate time to take advantage of that possibility. Based on my own personally developed swing trading system (which is always work in progress as I fine tune it), EUR:USD remains short on the Weekly time frame based on last Week’s close and still remains short on the Daily time frame, but only just! On the Daily time frame my system will switch long on a daily candle close above 1.3237 and I have therefore used this as the basis of my stop loss positioning.
The charts themselves don’t look hugely convincing for either direction, but here are a few in support of my trade:
Hourly shows a resisting trend line, an upside break of which will encourage me to re-evaluate the trade:
The Daily chart shows an area of resistance at 1.3168 that has historically acted as a trend inflection point. It is also worth noting that even if a long term low is in place, virtually all EUR:USD rallies from long term lows either retrace shortly after breaking the 50MA, or in the rare cases where this doesn’t happen they eventually come back to re-test the 50MA which in my situation would offer an opportunity to close the position at break-even if my analysis turned out to be wrong:
Moving on to the Weekly chart, I do have mixed opinions about this technically, but just wanted to point out that the 23.8% retrace of the down move so far also lies in the 1.3168 area adding further, albeit weak reason as to why resistance may be found in this price area:
So, it’s a trade that’s certainly not without it’s risks, more so with the constant uncertainty and news events out of the Euro zone, but on a risk versus reward basis, it’s a risk I’m happy to take.