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The Awesome Oscillator divergence occurred in the EUR/GBP earlier today. I entered a limit buy at 0.8785 at around 7 GMT and made it expired at 9 GMT. The price was never hit.
Bummer! This trade is a loss. Didn’t I say Dollar Yen was crazy before? Anyway, I bought at 96.15 and placed the take profit at 97.15, and stop loss at 95.15. The low was at around 95.13. How lucky of me for my stop loss to get hit! Just at around the same when I entered the buy order yesterday, Euro Dollar and Pound Dollar both pairs also showed divergence as well. Why did I decide to trade this crazy Dollar Yen which is totally puzzling me right now? Why didn’t I just trade EUR/USD or GBP/USD? Both would have been winners. Silly silly me!
Divergence is now showing up in the Dollar Yen pair; however, the price now is 96.53, which is well above the low of 96.12. I’ll watch it for the next few hours to see if it retests the low. And the Tokyo market is about to open. We should see some price action in this pair soon.
5/13/09 Update
I finally entered the trade with a buy order at 0.8786. As I mentioned in the previous post, I set the profit target 50 pips away, at 0.8836, and the stop loss 100 pips away, at 0.8686. After the order was filled, this pair fluctuated between 0.8815 and 0.8870 for quite some time before it finally shot up all the way to 0.8900. Our target was reached at around 11 AM GMT. 50 pips of profit.
This is the update of an earlier post. I have not yet entered an order yet because the divergence occurred right before the U.S market close and before the Asian market open. I thought I’d stay on the side line.
After the Germany market opened, the pair broke the previous low and dipped down to 0.8762. The divergence is still valid. I think I may enter a buy order at around 0.8765 – 0.8770. I’ll set the take profit for 50 pips but stop loss for 100.
