I wanted post an update on the Euro positions I've had open recently.  One has been profitable for me, and the other not so much.

First with the bad...

The EUR/USD short position I took after the pair broke the rising trendline was stopped out on Friday when the pair retraced back above the trendline.  I took a -115 pip hit on both halves of that position.  In the words of Forrest Gump, "that's all I got to say about that."

Now for the good...

The EUR/GBP short I took initially moved in my favor but then retraced and waffled around my entry price for a bit.  Sunday evening I'd had enough and tightened my stop to just above the high for the day.  Overnight Sunday and into Monday morning, the pair began to move lower, and I was able to bank half of my position at 1R for 167 pips.  The other half of my EUR/GBP position is now risk free.

In reviewing my EUR/GBP position tonight, I see a possible low-risk opportunity for adding to my short position shaping up.  The 4 hour chart below shows that we are at the top of a channel, with price giving the appearance of respecting the down trendline.  The overall trend on the daily chart is down, indicated by the top red line.

So, I've entered a sell order just below the low of the current candle on the 4 hour. If price continues to move south, this order will add to my EUR/GBP position.

• Short Entry: 0.8835
• Initial Stoploss: 0.8927

Greetings, one and all!  Tonight I've entered a long order on GBP/JPY, betting that the pair will move higher.  Let's get down to business and take a look at the charts...

On the daily chart, I see that we've made a higher high after a prolonged downtrend.  After making the higher high, GBP/JPY has retraced a bit, and today we saw a pin bar form on the daily, which may turn out to be a new higher low.

• Long Entry:  130.05
• Initial Stoploss:  126.99

Edit 2/15/09 6:50 PM:  Well, GBP/JPY moved in my favor enough for me to move my stop to just over breakeven, but I was then stopped out on the gap down over the weekend. At least I didn’t lose anything on the trade, though - preservation of capital is key!

I've entered a long position in USD/JPY tonight.  The pair has been in steady downtrend for several months and is finally showing signs of taking a breather.

The pair rallied nicely in the second half of December, breaking the down trendline.  The pair has fallen since the beginning on January, but now appears to be making a higher low and turning north again.  The bullish engulfing pattern on today's daily chart is what caused me to pull the trigger and bet on USD/JPY rising.

Ok, so it's not a true bullish engulfing pattern.

Today's open was slightly higher than yesterday's close (by about 10 pips), but what I see on the daily chart is enough like a bullish engulfing pattern to make me feel comfortable entering a long position.  The action over the past two days shows bears pushing the price down yesterday at the end of about a week-long downtrend; today the bulls took over with conviction, pushing the dollar up past yesterday's high.  So, while it's not a true bullish engulfing pattern, the reasons for trading a bullish engulfing pattern are there.

So, I'm long with my stop just below today's low, betting that this pair will rise.  However, as my last trade showed me, I could be wrong!

• Long Entry:  89.994
• Initial Stoploss:  88.450

Edit 1/19/2009 7:30 PM: After moving up for a couple of days, the pair as retraced a bit today. Though my position hasn't yet hit 1R, I've moved my stoploss to breakeven, which is below today's low, to protect my capital. Hopefully tomorrow will see USD/JPY resuming its move up.

Edit 1/20/2009 9:00 PM: My stop at breakeven was hit today, taking me out of the trade.  After an initial thrust up, the pair didn't seem to have the follow-through that I had expected.  So, I'm happy to be out with a scratch trade.  The pair may resume its move up, but for now, I'm happy to sit on the sidelines and watch.

EUR/USD made it clear today, in no uncertain terms, that its downtrend is over.  Observers more astute than myself may have stuck a fork in the Euro downtrend several days prior to today, but I've been waiting for a key piece of evidence - a trendline break.

The pair broke the down trendline starting with the high on 7/15/08 and retested on 9/22/08 with vigor today, as it soared through it by almost 300 pips.  This, coupled with the fact that the pair has made a higher high and a higher low, leaves me with no reason to maintain a short bias any longer.

So what does this mean for my EUR/USD trading?  Well, I'll be waiting for a pullback and looking for long opportunities, as long as there remains evidence that we are now in an uptrend (i.e., higher highs and higher lows).  Of course, there's always a possibility that the market will move sideways for awhile.