What a week it’s been already! First there was a flight to save haven currencies, then the dollar was sold off. The Aussie’s been under pressure even though gold prices have been rising, the US stock market has been seeing some crazy swings and I am trading it all! Posting my daily trades and the thought process behind them has really made me think more before I go into a play so I appreciate you guys coming back each day! Do you remember when I mentioned that summer trading is usually slow? As you can see that has been very true for the Euro.
There is not enough volume to push the pair one way or the other and it’s been forming this really tight wedge over the summer months. Basically, the price has been bouncing back and forth in a tight range that is getting tighter. This is a good thing and a bad thing. On the positive side it presents an easy way to range trade. You simply go long at 1.41ish and go short at 1.45ish. I don’t range trade because I don’t have any practice doing it. I’d rather trade breakouts or breakdowns, when the price finally gets out of the range. The tighter the range gets, the more likely a strong breakout is. I’ll do a post sometime soon about trading breakouts but let’s get to today’s trade.
So anyway, today’s trade is a pretty sweet set up. London has been trading for a few hours already and the Euro is under pressure because German GDP growth failed to meet expectations. If you didn’t already know, Germany is one of the strongest countries in the European Union, so if they are showing negative signs, you can bet there are more to come from some of the other weaker countries in the EU.
I placed a short Euro trade at about 1.438. I am expecting further drops once the US and Canadian currency markets open around 8 am EST. As always, I will let you know how the trade goes in the comments.