This morning the Euro broke out against the Yen and the Pound. But it was the EUR/USD pair that caught my eye. It has been consolidating downwards for the past 2 months in a very orderly manner but never really in an out of control manner. So today, when price broke out above Friday’s high I went long with a close stop under Friday’s low. My initial target would yield a solid 3.5 R/R.

If this trade is going to start moving, it should do so sooner rather than later and it is by no means out of the woods as a good argument could just as easily be made for shorting here in the 8/34 EMA sell zone created when both EMAs are sloping downwards and price is approaching from underneath. So I’ll have to watch it closely tomorrow and if nothing positive happens within a day or two (and I haven’t gotten stopped out), I’ll really have to start tightening up my stop.

The good things this trade has going for it are MACD cross and psuedo RSI divergence. Price is trying to map out a double bottom, but like I said, the next couple of days will be very telling. The EUR/JPY has been in a very strong uptrend for the past few months and until some technical damage appears on the chart, it’d be hard to bet against its continuance. What worries me is this EUR/GBP chart:

It has definitely sustains some technical damage and I will expect some strong resistance in the neighborhood of the yellow line. Once price reaches it, if there has still been no movement on my EUR/USD trade, then I’ll have to really to tighten my stop and even start thinking about going the other direction.

Time will tell soon enough, but right now, the 3.5 to 1 trade-off make it worth the attempt.

I finally managed to throw together a basic spreadsheet to analyze my FX trades and I am happy to report that I am off to a great start so far! My win/loss ratio is over 50% which is always nice, but what is really incredible has been the average return for the trades I have taken so far; Almost 70 pips / trade!!!

Grant it, those last 2 shorts in GBP really went a long way towards that end. I’m trying to pick my spots very carefully and as of this moment I am flat, but have a couple of pairs that I am watching. Now that I have the spreadsheet, I hope to post more daily updates and a continuing log of my trades as I continue to move forward with my foray into the FX markets. So far so good, we’ll just have to wait and see if i can keep 8:1 ratio on my winning/losing trades.

Have a great weekend. My wife and I are going house hunting tomorrow as we hope to move to Williamsburg, VA in a couple of months. Wish us luck!