EUR/USD tested the resistance level of yesterday’s pivot point at 1.3242 before falling down to the S2 pivot point for a 200 pips’ decline, hitting the low at 1.3009. The breakout pattern at the 15-minute forex chart was the signal that triggered my trading order and I was short EUR/USD in the middle of the day at 1.3158. Twenty minutes later I was scaling out 80% of my position buying 80,000 euros back at 1.3100 and letting 20,000 short, in case the currency pair decides to go to uncharted depths. From the looks of the daily chart Euro is not going up any time soon.
The candlestick that initiated the breakout signal at the 15-minute forex chart was a candlestick with no shadows, which is interpreted as great selling power overcoming the support level. The inverted hammer at the hourly EUR/USD chart had already got me prepared for a possible downtrend. Besides, I already [intlink id=”2256″ type=”post”]predicted a decline[/intlink] a week ago.
The common question that comes up after a breakout forex signal is how far down or up the currency will move. This time I based my exit strategy on the daily pivot points. Quite often I find the pivot points levels quite reliable when forex trading either the cable or other currency pairs. So, I traded out 80% of my initial position at 1.31 winning more than 500 US dollars.
I am now short EUR/USD for a remaining 0.2 lot. Certainly that isn’t a big amount of money when forex trading is in question, but having the opportunity to make more money at zero risk is an investment I am always willing to make. Zero risk is due to setting my stop loss right below the price I entered the market, close to 1.3150. Scaling out allows me to take advantage of the downtrend, since the remaining 0.2 lot may actually win more than the 0.8 lot I traded out! And I have no doubts Euro will end its decline in the next weeks or months.