BAM!!!

BAM!!!

We nailed the triangle something fierce.  What a great break out.  At the time of this posting the Eur/Cad is sitting at 1.3930, this is 120 pips on the break out.  If you are trading minis, the pip value is $0.85 per pip, this is equivalent to $102, or $1,020 on full size accounts per contract.  We started with a 100 pip stop loss.  I am going to adjust my stop loss to the entry price, this will guarantee no loss on the trade, gives me a 120 pip stop loss and the entry price is, interestingly enough, the 67% Fibonacci line based solely on today’s move.
The Euro broke below the 1.1850 mark I have been waiting for the past 3 months.  I think it is a good time to watch for an entry.  I am extremely excited, this appears to be the break out and the end of our flat, erratic non trending market.  A trending market can be a real cash machine.  Have a great weekend and successful trading.

Tightening the entry

Tightening the entry signals.

The triangle narrowed today, I am still comfortable with this trade set up. I am adjusting my entry prices to reflect the narrowing triangle.  Buy entry price, 1.4305, Sell entry price 1.4050.  These entry prices are still 50 pips (10%) outside of the triangle.  The 100 pip stop on both and limits still hold.

TRIANGLE READY TO BREAK

In the picture below, we have a beautiful triangle forming on the Eur/Cad.  This is a 30-day triangle (time from the base to the tip of the triangle).  The rule of thumb is not to take a breakout in the last 10% of time, in other words the last 3 days on this triangle.  This allows us to watch for a breakout up to 11/9/05.  The base of the triangle is 500 pips.  I like to see a break of at least 10% of the pattern size.  That being said, a break above 1.4320 or below 1.4035 will indicate a trade.  A retracement of the 50 pip break and cross back into the triangle would kill the trade.  The set is as follows, buy entry order at 1.4320 with a 100 pip stop and a 400 pip limit (4:1 reward/risk ratio) with a simultaneous, mirrored sell order at 1.4035, 100 pip stop loss and 400 pip limit.  These limits are 50 pips short of the upper target based on the pattern and 50 pips late on the entry.  I would rather make 80% of the movement and be right more often than try for 100% of the price movement and be wrong a lot more. Because it has taken 3 weeks to form, it could take 3 weeks for the price to reach the limits.  If the pair breaks out, I will probably adjust the stops along the way.  If it does not break by the 9th, the pattern is void.  If I had to pick one direction, I would favor a short trade as commodity pricing has been rising and the Euro has been struggling.  The ECB meets tonight which could be the catalyst to break the price out of the triangle.  If you have questions about the pattern or trade please click on comment and the system will email me.  Feel free to click the email link below to forward this to friends or other traders.

Eur/Cad Triangle poised for a break 

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.