EUR/USD Trending Down-Support In View
Shain Vernier • 2 min read
The USD is having a strong session across the forex majors. Gains against the Euro, Swiss franc, and British pound have put an exclamation point on the recent recovery experienced by the greenback. Amid a sparsely populated economic calendar, the bold performance is a product of a recent boost in the yields of U.S. Treasuries.
Last week’s spike in U.S. 10 Year T-Note yields grabbed the attention of traders around the globe. Inflationary concerns fueled speculation regarding the future of U.S. monetary policy. Given the stated position of “gradual tightening” by the U.S. Federal Reserve (FED), forthcoming rate hikes are being priced into the market. The USD is the beneficiary.
As of today, the CME’s FedWatch tool estimates a 75% chance of a March 21 rate hike. We will see what develops, but that is a pretty firm stance over 40 days out from the next FOMC meeting.
Unfortunately, active trading produces losing trades. In the U.S. Overnight Forex Preview from Tuesday, I outlined a long trading plan in the EUR/USD. This trade failed miserably, producing only a 10 pip positive move before being swept out.
As of this writing, price is testing an area of downside support. Here are the key levels for the remainder of the U.S. session:
- Support(1): Bollinger MP, 1.2274
- Support(2): Daily SMA, 1.2233
Bottom Line: Handling losing trades well is a big part of successful trading. Every trader has had to face losers and they are certainly no fun. All we can do is document what went wrong (if anything), learn, and move on to the next setup.
For the remainder of the session, I will have buy orders in ahead of the Daily SMA at 1.2237 with an initial stop at 1.2197. Using a standard 1:1 R/R management plan, this trade produces 40 pips profit.
If elected today, this trade will likely take considerable time to play out. Be sure to check back for tips on how to limit risk while preserving upside profitability in the event the position goes live.