Eight days ago, Nick entered a trade and is now floating over 200 pips profit. Read about the ideas and processes behind his recent sell trade on EUR/CAD.
While using the Edgefinder, Nick saw that the pair had a pretty weak score of -4 which indicated that there could be selling pressure on the horizon. Other than a bullish trend reading, this pair had all the fundamentals going against it. Europe is now sitting at 0% interest rate while the loonie yields 1.50%. Inflation is also less of an issue for Canada. COT read neutral. Europe's unemployment rate was also weaker than Canada's. A bunch of -1 readings across the board signaled that sell pressure could be imminent.
The EUR/CAD Setup
This was where price was at during the analysis. Price had just bounced up from a previous bottom and was making its way towards resistance. The resistance was above at that triple top we see on the 1D timeframe. If price was moving upward with a sell bias on the Edgefinder, this triple top looked like a decent short opportunity.
A signal was sent to the community once Nick took the sell trade. The goal of this trade was to catch a longer term swing and keep the SL distant from the entry to give this pair room to run. The entry was locked in at 1.37285 where that triple top had rejected price before.
A closer look provides us with a good idea of where Nick's targets were. That first target was between two support levels between 1.35886 and 1.35470. Targets aren't necessarily TP zones, but they can be used as signals to reevaluate the trade's strength or weakness depending on price action and new market conditions. It was also used to suggest when to move the stop loss. When the trade floated in profit, Nick moved the SL to break even to ensure that a bounce wouldn't cause a loss on the trade. The second target area is where the double bottom was he would look to realize profit.
After the pair moved over 90 pips in profit, Nick trailed the stop again to about 48 pips below entry (locking in around half of what is floating). It's been 8 days since the trade was opened and Nick is floating over 200 pips. The SL trailed once more to lock 174 pips, but the trade is still active.
Price has about 80-100 pips of room before it hits that double bottom support level, where the trade might close.
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