Sell at 1.1157. TP at 1.0975 and SL at 1.1240
Yesterday, I outlined the Citi trade of the week. It was to sell the EURUSD at 1.1157 with a profit target at 1.0975 and a SL at 1.1240.
The trade was stopped out with a loss of 83 pips. The trade was only in the money for 5 pips. The low yesterday was 1.1152.
What went wrong?
Well from the start the trade was done right at support from a trend line connecting lows from August 9 and August 12. There was also an area with multiple swing lows and highs between 1.1153-59 (see red circles). Selling at 1.1157 anticipated a break and move lower, but the area was not broken. That technical support holding helped the bulls/buyers.
The second error for me was they were selling while the price was still above the 100 hour MA (it was at 1.1143 at the time of the trade). If the price is above the 100 and 200 hour MA (blue and green line, that is not bearish but more bullish).
The third error in my opinion was the stop. For me, 1.1186-90 was a key level (series of highs/lows - see blue circles). I know it is relatively close to the entry. However, a break above that level - or at worst the 1.1214-18 level (Highs) - would have been enough pain for me.
TRADE LESSON: If you are to do a trade, don't enter right above a key support area. You may be bearish for all the right reasons but the story can change in a heartbeat. Instead, wait for the support to be broken. If it is not broken, look for a higher level to sell and at least sell higher.
Although it took until today to have the trade liquidated, it was pretty much doomed (or at least in trouble) as soon as the market DID NOT break below the support at the trade entry level. Citi may take a shot at it, but for you and I, we are smarter than that. Right?
