By Tyler Wade
What was going to be an easy trade turned out to be most difficult. Sometimes at intermediate highs and lows we can see that smart money traders can manufacture breakouts and break downs that fool the dumb money traders into entering trades at the worst moment This is not what happened with our euro trade as we shorted too early. What I am talking about are the dumb money traders who bought the breakout after the euro broke out of the 12 year trend line. Of course today, the market closed back below the trendline leaving those who had just bought with some bad positions.
Just as the Euro broke above the 12 year trend line yesterday and closed back below it today, the dollar broke below support yesterday but managed to re-gain the support today.
The euro trade has left a bad taste in everyone's mouth including mine, but not every trade is going to be easy. Today, the dollar gave us the swing high we have been waiting on for weeks. Re-establishing positions we just lost money with is not an easy decision. This is a decision everyone will need to make for themselves but I personally have re-entered half the positions I previously had. Our original entry price on this trade was near 118. If you get in near 118 you can still make $5,000 per contract which is more than double what was lost per contract when our stops were hit.
While our feeling about this trade have changed, the reasons we entered this trade have not. Sentiment levels on the euro are at extreme highs and on the dollar are at extreme lows, even with today's big move in price.
What I will be looking for tomorrow is the dollar to close above the 10 day MA and even move above the daily cycle trend line before the market closes. If that happens I will be prepared to say we have had our daily cycle low in the dollar and are beginning a new ICL in the dollar which will push the euro down.
Many traders have already re-entered some of their original positions. It's your recentcy bias which is telling you it's a bad idea to take this trade and I can understand that but this is a new trade. It is a great set up and you should try at least one position.
If you have any questions feel free to message me on WhatsApp.
The Speculation page is used for educational purposes and to talk about our opinion on trades and what is going on in the market. All trade recommendations are made in "The Pit". This is also a blog page where you can ask questions, post your thoughts, or ask for help. Be sure to use an anonymous name. If you have any questions feel free to reach out to us via email.