Instrument: EURUSD
Trade Type: Short
Timeframe: 4HR
Entry Price: 1.05084
Stop Loss (SL): 1.05372
Take Profit (TP): 1.04493
Risk-Reward Ratio: 1:2
Outcome: Profitable
Entry/Analysis:
Today I executed a short trade on EUR/USD following the release of key Eurozone economic data yesterday. At the time of entry, the price was consolidating between a well-defined support and resistance zone, with a clear rejection off the resistance level. This price action allowed me to strategically place my stop loss just above the rejection wick, minimizing potential risk. Retail sentiment was heavily skewed, with 72% of traders holding long positions and only 28% short, signaling a strong contrarian opportunity.
From a fundamental perspective, I anticipate a hawkish stance from the Federal Reserve on interest rate cuts, which should sustain the U.S. dollar’s strength. This bias was supported by current price action, as EUR/USD struggled to break above resistance. Multiple technical forecasts, including those from Economies.com and Forex24.pro, project further downside, with targets in the 1.0400–1.0300 range. My strategy for this trade aligns with these projections, aiming to capitalize on the pair’s bearish momentum.
Exit/Outcome:
The trade ended with a stop-out over the weekend due to a pullback in price to the resistance zone, where the spread triggered my stop-loss order. This occurred despite the overall directional bias being correct, as the price resumed its decline shortly after hitting my stop. The heavy sell-off following the Federal Reserve's interest rate decision had set the trade into motion, but the weekend volatility and widened spreads caused an unexpected exit.
While it was frustrating to see the trade’s potential diminished by a stop-loss triggered by spread, the decision to place my stop above the resistance rejection wick was a sound one. It minimized risk while still giving the trade room to breathe. Although I didn’t capture the entire move, I take solace in securing a portion of the profit and knowing my analysis and directional bias were on point. This outcome reinforces the importance of staying disciplined and focusing on the long-term edge of my strategy rather than fixating on short-term setbacks.
Psychology:
Experiencing a stop-out due to spread is always a test of a trader's mental resilience. Initially, I felt a surge of frustration, particularly knowing that my analysis was correct and the price eventually moved in my intended direction. However, trading is as much about managing emotions as it is about reading charts. I reminded myself that such occurrences are part of the trading journey—spreads widen, unexpected pullbacks happen, and no trade is guaranteed to go as planned.
Instead of dwelling on the frustration, I shifted my focus to the positives: my setup was valid, my analysis aligned with the market's movement, and I adhered to my trading plan with discipline. This trade served as a reminder to embrace the unpredictability of the market and to detach emotionally from individual outcomes. I now see this as an opportunity to refine my approach to weekend trades and adjust my expectations for spread-related volatility, ultimately strengthening my mental edge.
Trade score-
Execution: 3/3
Psychology: 2/3
Overall Trade: 5/6
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