Monday, October 31, 2005

Two one Touches ahead of FOMC and ECB

The Eur has calmed down right near the middle of the channel. This 300 pip channel has been the plague of many trades, whether long or short. This week the FOMC meets as well as the ECB (European Central Bank). The Eur/Usd is interest rate sensitive, my anticipation is the fundamental outcome of the week will give the pair, and probably numerous pairs, the thrust necessary to break out of the channel. I have bought 2 one touches 220 pips away from the current price. This places the one stops 35 pips or just over 10% outside of the channel. As long as the trade moves I have about a 2 to 1 costs vs rewards or a 1 to 1 risk to reward. There is a slight chance both could hit by Friday morning, but this is unlikely.

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