EURUSD Short- Wednesday 11th December 2024

Published on 13 December 2024 at 05:37

Instrument: EURUSD

Trade Type: Short

Timeframe: 4HR

Entry Price: 1.05305

Stop Loss (SL): 1.05470

Take Profit (TP): 1.05282

Risk-Reward Ratio: 0.07

Outcome: Break Even

Entry Analysis:

The EURUSD short trade was initiated following a decisive break and retest of a prominent supply zone, highlighting a shift in market dynamics favoring bearish momentum. This retest provided a high-probability entry point, where I anticipated another pullback to the zone, allowing me to place a sell limit order in alignment with the prevailing downtrend. The 22nd November candle wick serves as my target, being a significant historical support level that aligns with the broader technical structure of lower highs and lower lows. The bearish bias is further supported by the 200-day moving average, which remains well above the current price action, acting as a dynamic resistance level. Adding to this technical confluence is today's upcoming CPI data release, which I anticipate will act as a fundamental catalyst. If the data supports continued dollar strength, it could reinforce selling pressure on EURUSD, increasing the likelihood of achieving the trade’s target while maintaining a favorable risk-reward ratio.

Exit/Outcome:

After initiating a short position on EURUSD, the trade began to play out as expected, with price initially reacting to the demand zone at 1.04809. This was aligned with my first target, and I prudently moved my stop loss into profit to secure my position during the pullback. However, despite my analysis, the price movement continued to exhibit bullish characteristics overnight. This led to a retest of the supply zone, eventually triggering my stop loss at break-even.

This trade outcome underscores the importance of adaptability in volatile market conditions. While my directional bias ultimately proved accurate, external circumstances prevented me from re-entering the position. Reviewing this trade highlighted a need for better strategies to manage re-entry opportunities, especially in cases where the market aligns with my broader analysis after an initial setback.

Recent analysis of EURUSD suggests this pullback and retest behavior was consistent with broader market expectations. Bullish sentiment likely stemmed from positive U.S. economic data, including an optimistic outlook on job openings (JOLTS) and the IBD/TIPP Economic Optimism Index, both supporting USD strength. However, the technical forecast also predicted downward waves, with the pair hovering around consolidation at 1.0500 and testing lower boundaries near 1.04600. This reflects the market’s indecisiveness, which influenced my trade outcome.

Psychology:

Emotionally, this trade was a valuable learning experience in managing expectations and mindset during periods of uncertainty. While my initial reaction to move the stop loss into profit was sound and demonstrated good risk management, my inability to re-enter the trade stemmed from hesitation fueled by earlier frustration.

One critical takeaway is the importance of maintaining a neutral mindset, regardless of immediate outcomes. Seeing my directional bias play out after being stopped at break-even could have been discouraging, but it also highlights the need to trust my analysis. In hindsight, the overnight bullish sentiment was a signal to observe market conditions more carefully, not to disengage entirely.

To improve, I aim to refine my emotional resilience during such scenarios. Breathing exercises and mindfulness techniques can help me remain calm and focused on the process rather than the result. Additionally, implementing alerts for re-entry triggers or developing predefined re-entry rules could reduce hesitation and allow me to capitalize on opportunities that align with my analysis.

This trade underscores the complexity of trading psychology, especially in dynamic markets like EURUSD. Balancing emotional discipline with strategic flexibility will be crucial for future success.

Trade Score:

Execution: 3/3

Psychology: 2/3

Overall Score: 5/6

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