October 15th was a great day to be short on the EURUSD. After several days insisting on the upside, it finally tested the big resistance around 1.1450 the previous day. While a potential breakout could be around any time soon, dovish comments early on in the morning by ECB’s Nowotny started the movement downside.
EURUSD, Daily chart
EURUSD, 5-minute chart
The big move came at 13h30 at the release of important economic data concerning the US economy, with the biggest relevance to the Core CPI data.
Before the data showed up, I tried a strategy that I have been trying during the last few days. Whenever there is important data coming up, I place a smaller-than-usual position just a few minutes before on the pointed direction of the market previous to the release and place a close stop. In this case, I shorted EURUSD before but I believe I putted my stop too much close, at 1.1377, and price touched it seconds before it went down.
But then I saw the data was massively positive for the USD, so I risked a bigger position on the short side, again, with a stop on the same place – when I did it, after the release, my price entry was already at 1,14219. It was a bigger position with a stop farther away, but I thought the risk was justified (but I’m not sure). I was aiming at a one-to-one movement till 1.1366. The aggressiveness of the move surprised me, because it almost touched the point in less than 15 minutes, while I was expecting a correction before it touched that point. It almost touched it and then it started to go up and seemed too stretched for the moment, so I liquidated the position at 1.13765.