Lessons in Profit Taking, EURUSD (13 Apr 09)

It was a long and enjoyable Easter weekend at my friend's KL home. I was missing trading having laid off the whole of Easter week due to the low volume in the market. Spotting this move kinda excited me ...

The pip spread was not very good (1.5 on Oanda) due to Great Britain in the midst of Easter festivities. However this move was attractive enough for me to take the trade. Eurodollar was trading in a channel and 2 candles before I setup my trade the price momentarily broke out of the channel's resistance. The lesson to learn here is the exits of the trade.


Prelude:
Eurodollar was consolidating after a short burst out of her channel resistance. I was ready to go long aiming for the profit price level of 1.3280; the first picture shows how I derived that price.


The Trade:
I setup for a long trade at 1.3250 looking at closing half the position at 1.3260(10 pips) and ultimately 1.3270. Stop loss is 20 pips at 1.3230. Everything moved as plan and I made 21 pips in 15mins.


On Hindsight:
My psychology when I closed the trade was that price was very near the strong 1.3280 resistance zone. Fearing the lack of orders beyond and having hit my daily profit target I closed the trade.
Note however that this was near 1.3300 and the price on this occasion gravitated towards the round number. I later noticed that the 200 SMA on 3hr was also on 1.3300. MACD on the 5mins chart was still pointing to a strong upwards momentum when I closed the trade. All in all I should have held on for another 10-20 pips.