5/8/2014 ECB Minimum Bid Rate (0745 EDT)
Forecast: 0.25%
Actual: 0.25%
TRAP TRADE (DULL REACTION-NO FILL)
Started @ 1.3932 (last price)
————
Trap Trade:
)))1st Peak @ 1.3949 – 0745:08 (1 min)
)))17 ticks

)))Reversal to 1.3937 – 0745:10 (1 min)
)))-12 ticks

)))2nd Peak @ 1.3959 – 0745:49 (1 min)
)))27 ticks
————
Reversal to 1.3938 – 0804 (19 min)
21 ticks

Trap Trade Bracket setup:
Long entries – 1.3912 (just below the S1 Mid Pivot) / 1.3901 (just above the S2 Mid Pivot)
Short entries – 1.3950 (just above the R2 Pivot) / 1.3962 (on the R3 Mid Pivot)

Notes: The ECB decided to leave the Minimum Bid Rate unchanged at 0.25% and took no further action. This resulted in a more decisive long spike that was not ideal for the Trap Trade, but still would have worked it played correctly. Your inner tier short entry would have filled right around the 20 sec mark if you did not cancel. Then it would have made a 2nd push higher as the :46 bar closed to see 9 ticks of heat. Then it backed off to hover between 1 and 5 ticks in the red for about 10 min before it fell further. In all previous reactions in the last 4 months, it has reversed immediately to the origin, so this was an anomaly. Be sure to cancel the outer tier and move the stop to 1.3960 and look to exit when it first reaches the 20 SMA. This would have yielded 6 ticks on the :57 bar after 12 min. It eventually fell to the major SMAs and R2 Mid Pivot 7 min later to allow a max of 10 ticks. Then it recovered to the R2 Pivot and traded sideways into the press conference.

7/3/2014 ECB Minimum Bid Rate (0745 EDT)
Forecast: 0.15%
Actual: 0.15%
TRAP TRADE (DULL REACTION-NO FILL)
Started @ 1.3655 (last price)
————
Trap Trade:
1st Bar span 1.3655 – 1.3657 – 0746 (1 min)
2 ticks
————

Trap Trade Bracket setup:
Long entries – 1.3637 (just below the S2 Pivot) / 1.3627 (just below the S3 Mid Pivot)
Short entries – 1.3675 (just above the R2 Pivot) / 1.3685 (just above the R3 Mid Pivot)

Notes: The ECB decided to leave the Minimum Bid Rate unchanged at 0.15% and took no further significant action in the aftermath of the cut last month. This resulted in a yawner with no impulse whatsoever as the expectations were completely met. With no blast after 20 sec, cancel the order.

9/4/2014 ECB Minimum Bid Rate (0745 EDT)
Forecast: 0.15%
Actual: 0.05%
TRAP TRADE -OUTER TIER STOPPED
Started @ 1.3131 (last price)
————
Trap Trade:
)))1st Peak @ 1.3084 – 0745:06 (1 min)
)))-47 ticks

)))Reversal to 1.3114 – 0745:07 (1 min)
)))30 ticks

)))Pullback to 1.3077 – 0745:17 (1 min)
)))-37 ticks

)))Reversal to 1.3097 – 0745:27 (1 min)
)))20 ticks
————
Final Peak @ 1.2996 – 0838 (53 min)
135 ticks

Reversal to 1.3032 – 0854 (69 min)
36 ticks

Trap Trade Bracket setup:
Long entries – 1.3111 (just below the S3 Mid Pivot) / 1.3100 (just below the S3 Pivot)
Short entries – 1.3151 (just above the R1 Mid Pivot/ OOD) / 1.3162 (just above the R2 Mid Pivot)

Notes: The ECB decided to cut the Minimum Bid Rate from 0.15% to 0.05% which was mostly unexpected and followed a cut of 0.10% in June. This time is was not priced in and caused a sharp drop after multiple whipsaw swings of 50 ticks in the first 20 sec. While the Trap Trade is a great setup for these scenarios, the settings were to tight and would have caused a stop out on both tiers. If you traded both, you would have filled long at 1.3111 and 1.3100, then stopped at 1.3090 for a loss of 31 total ticks if you used “average price” for the stop loss position. If you used last fill position, the stop would have been at 1.3085 and would have resulted in a 41 tick loss. If you just traded the outer tier, you would have lost 15 ticks with long fill at 1.3100 and stop at 1.3085. There had been chatter in the last several days about the ECB weighing a cut or other options to devalue, but it still was viewed as a long shot or unlikely course of action. Still to be safe, we should have just traded the outer tier on this one with the ramblings. It continued to fall precipitously after the first bar found support at the S4 Pivot to snag another 81 ticks in the next 52 min. The press conference added to this at 0830. Then we saw a reversal of 36 ticks in the next 16 min that crossed the 50 SMA. After that it traded sideways for 2 hrs, then continued to selloff as the market went into the afternoon. This is a perfect opportunity to jump on the wave and sell after the initial trade around 1.3080 – 1.3085. When there is a scenario like this, the selling will keep going for a long time. Trail the stop and be patient as you see up to 80+ ticks.

11/6/2014 ECB Minimum Bid Rate (0745 EST)
Forecast: 0.05%
Actual: 0.05%
TRAP TRADE – DULL NO FILL
Started @ 1.2528 – shift to 1.2524
————
Trap Trade:
)))1st Peak @ 1.2515 – 0744:52 (0 min)
)))-9 ticks

)))Reversal to 1.2533 – 0745:07 (1 min)
)))18 ticks
————
Pullback to 1.2513 – 0748 (3 min)
20 ticks

Reversal to 1.2527 – 0752 (7 min)
14 ticks

Trap Trade Bracket setup:
Long entries – 1.2506 (just below the R1 Pivot) / 1.2494 (just below the R1 Mid pivot)
Short entries – 1.2543 (No SMA / Pivot near) / 1.2554 (No SMA / Pivot near)

Notes: The ECB decided to leave rates pat and wait to see the longer term effects of the stimulus. The initial position of the anchor point would have shifted lower about 4 ticks to the area of the 100 SMA to bias your orders lower. Then we saw a premature short spike of 9 ticks 8 sec early followed by a 18 tick reversal 15 sec later to the area of the R2 Pivot. Then it pulled back 20 ticks in the next 2 min to match the premature spike low. With the movement well short of the inner tiers, cancel the order. After the Pullback, it reversed 14 ticks in the next 4 min to cross the 100 SMA. After that it trickled lower and traded sideways around the SMAs as it headed into the press conference at 0830.

1/22/2015 ECB Minimum Bid Rate (0745 EST)
Forecast: 0.05%
Actual: 0.05%
TRAP TRADE – INNER TIER
Started @ 1.1632 – shift to 1.1620
————
Trap Trade:
)))1st Peak @ 1.1593 – 0744:55 (0 min)
)))-27 ticks

)))Reversal to 1.1640 – 0744:59 (0 min)
)))47 ticks

)))Pullback to 1.1602 – 0745:18 (1 min)
)))-38 ticks

)))Reversal to 1.668 – 0745:33 (1 min)
)))66 ticks

)))Pullback to 1.1627 – 0745:43 (1 min)
)))-41 ticks
————

Trap Trade Bracket setup:
Long entries – 1.1600 (No SMA / Pivot near) / 1.1590 (No SMA / Pivot near)
Short entries – 1.1640 (just below the R1 Mid Pivot) / 1.1650 (just above the HOD)

Notes: Wow, perfect report for the trap trade! The ECB decided to leave rates at record lows and left everyone in suspense with a pending policy announcement in 45 min. The initial position of the anchor point would have shifted lower about 10-12 ticks on a slow but methodical drift lower between 0744:15 and 0744:50. So bias your tiers about 10-12 ticks lower from the original placement. The chaos began prematurely at about 52 sec with a choppy short move in 3 sec for 27 ticks that crossed the PP Pivot and OOD, then reversed in 4 sec for 47 ticks to the R1 Mid Pivot. This would have filled your inner long entry at 1.1600 with 7 ticks to spare (or both entries if not adjusted), then reversed to hit your opposite inner short entry for a 40 tick profit. It continued to whipsaw such that if left alone the outer short entry would have filled at 0745:33 at 1.1650 and stopped at 1.1665. This is why it is best to cancel the unfilled orders after the initial move, or if unfilled on a dull move. Nearly all of the volatility was gone after the :46 bar.