Instrument: EURUSD
Trade Type: Short
Timeframe: 4HR
Entry Price: 1.05850
Stop Loss (SL): 1.6100
Take Profit (TP): N/A
Risk-Reward Ratio: N/A
Outcome: Not profitable
Entry/Analysis:
After being stopped out yesterday, I closely observed the EUR/USD price action and identified a rejection from a supply zone just above my previous entry, confirming strong seller activity. This rejection, coupled with the broader descending trend of lower highs and lows, reinforced my bearish bias. I entered a short trade at 1.05850 with a stop loss at 1.06100, strategically placed above the rejection zone. The U.S. dollar's strength, driven by rising bond yields and robust macroeconomic conditions, continues to weigh on the euro, further supported by diverging central bank policies, with the ECB showing limited tightening prospects compared to the Fed’s hawkish stance. Today's sustained resistance near 1.05917 validates the entry, with the 1st downside target around 1.04843 and the 2nd at around 1.03850, providing a favorable risk-reward setup as I anticipate the pair to continue to respect its bearish structure.
Exit/Outcome
The trade sharply reversed after initial signs of compliance with the bearish structure, pulling back to the top of the supply zone and ultimately triggering the stop loss at 1.06100. This reversal highlights the importance of flexibility in trading, as key market drivers—such as shifting sentiment or unexpected liquidity absorption—may alter the expected trajectory. While the trade setup was grounded in valid technical and fundamental reasoning, it serves as a reminder that no strategy guarantees success in all scenarios. The stop loss effectively limited potential losses, demonstrating the critical role of disciplined risk management in preserving capital and maintaining long-term profitability.
Psychology
The stop-out underscores the emotional challenges inherent in trading, particularly when a well-reasoned setup fails. It’s essential to recognize this as a normal part of the trading process and resist the urge to second-guess the strategy. Reflecting on the trade with a calm and analytical mindset ensures that valuable lessons are learned without compromising confidence. By focusing on adherence to the trading plan and acknowledging the probabilistic nature of markets, traders can maintain emotional resilience. This setback, while frustrating, offers an opportunity to refine future approaches, ensuring that execution remains consistent and free of reactive decision-making.
Execution: 3/3
Psychology: 3/3
Overall Trade Score: 6/6
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