On Monday, this blog piece laid out a strategy to go triple short EUR/USD. A key part of my overall strategy is identifying higher reward to risk ratios, and this set up ticks the box, with each entry risking between 50 and 100 points against potential gains of 500 to 900 points. The triple short has triggered on all three entries, in my view lifting the probability of a successful trade. And the good news is the price action since gives clear entry and stop levels for traders looking to join the action.
There is little possibility of a clean solution to Greece’s woes. More likely is a typically European approach; a temporary fix, with the promise of more talkfests and a shift in market focus to the next deadline – the ECB payment due on 20 July. By then, it’s entirely possible global markets will have tired of this sideshow, given its economic irrelevance.
In my view, yesterday’s stronger than expected consumer data is pointing the way for the next few weeks. A strengthening US economy could amp up rate rise expectations, and the USD. At the same time, Europe will be parading its weak fiscal credentials, possibly dragging on the EUR. This lines up nicely with the technical analysis:
I’m now triple short, entering at 1.1370 with a stop at 1.1465, on the breach of the uptrend at 1.1295 (stop 1.1355) and on the breach of the parabolic SAR at 1.1199 (stop 1.1268). Targets for this trade are 1.0820 (two thirds) and 1.0520 (one third).
However, proving there is no justice in markets, a bottom-feeding lobster with average intelligence could join this trade now that the triple signal has flashed. The last three trading days described a high at 1.1235 against the big candle low at 1.1135. The lobster double sells at 1.1125, with a stop above 1.1240 and targets at 1.0820 and 1.0520.