EURUSD Observations

[Bnet 10]

I just wanted to share some basic trading analysis here:

 

The EURO was fundamentally weakening, and on the daily ranging for a while. It would either break up or down.

 

 

When it broke earlier this month, there were a couple of good opportunities to make money [and one possibly coming up as it retraces again.

 

Trading the hourly charts may not be for novices [particularly on the trading psych area - it can be a bit stressful!], but just today there were a couple of other opportunities to make some bucks.

 

[Bnet 10]

On the hourly, again, there was a consolidation at support, where buying EUR/USD [upon breaking 1.3575] would have made some monies.

 

 

If you combine this with the daily, as well, selling off at the resistance line is a good idea. If the EUR/USD is going to be trending downwards on the daily, that would be a good entry point.

 

Often times, simple PA along with understanding ranging vs. trending can be the most profitable strategy. But you have to remain disciplined, setting stop losses properly, entries properly, and knowing when to take out a chunk of your profits!

[Tradewinds 12]

On the hourly, again, there was a consolidation at support,

 

Support from what time frame? I can't see where the support line originated. Do you have any guidelines for what is support?

[Bnet 10]

Tradewinds - thx for the Q. I am looking at the hourly, where the previous resistance line turns into the new support line. Note there is also a support line that intersects there, making it stronger.

 

 

Point is that generally basic support, resistance, trend lines along with price action is a good starting point for understanding what is going on. Too often, novices tack on a gazillion indicators without understanding the basics of price action.

 

Lines & PA should support one another. i.e. One may be tempted to buy when the price gets back to 1.3550 for the second time, but there is no suitable price action to make such a move on.

 

Similar to a game of poker, one should set very conservative rules and when those are met, put in a proper trade. [Entry & SL etc. I will get into soon - that is most challenging]

 

One note of caution - trading ranging pairs is a bit more challenging than trading trending pairs... particularly on a short timeframe such as the Hourly.

[Tradewinds 12]

Lines & PA should support one another.

 

Thanks for the chart. That looks good. I hadn't thought of using two separate support methods, and looking for where they converge. I really like that idea. It gives a lot more information, and makes the price action more understandable.

[Bnet 10]

So, continuing onto the trading observations... generally, trading the daily is the best, because longer timeframes are better for trading psychology IMHO. [other reasons exist, but my experience shows this is the main reason. When you are trading the daily, naturally you are in it for longer than a couple of hours, and aren't frantically looking at the charts, stressing, making bad decisions]

 

Trading psychology is a separate topic- i have lots of experience there

 

Anyhow, here is a short based on trendline, fibonacci as well as price action

 

 

You will notice that the moves up continue to be rejected, and then the price actually breaks below the previous low. This is where a sell, with a SL at the top of the previous 3 days, and taking half your profit at a reasonable point and letting the rest ride would be a good idea.

 

Notice also the fundamentals of the euro and the overall trend is downwards. It is generally recommended you don't trade against the trend! And if you do, be cautious.

 

At the current price point, it may range slightly and continue going down. It may be recommended to take some profits, move the SL and re-enter if it retraces. In fact, when you are going with the trend, you can take your profits, then wait for a retrace, then buy/sell again to go with the trend.

[Bnet 10]

P.S. My best advice regarding trading psych - take a break after a good run

 

i.e. If you did short the EUR/USD and made some money... don't trade for a short while, specially if you are feeling happy!!

 

Reason? When you are feeling happy, there may be over-confidence... and you may also lessen the value of your earnings. You may think that is "play money" now [let's say you made 5%, you may think you can risk that 5%]. You may then take a trade, get all stressed out from a loss and try to recoup that 5% again... make bad trades.

 

Point being- if you are feeling any type of emotion, good or bad... stop and take the day off. Plenty of opportunities coming.

[Tradewinds 12]

P.S. My best advice regarding trading psych - take a break after a good run

 

i.e. If you did short the EUR/USD and made some money... don't trade for a short while, specially if you are feeling happy!!

 

Reason? When you are feeling happy, there may be over-confidence... and you may also lessen the value of your earnings. You may think that is "play money" now [let's say you made 5%, you may think you can risk that 5%]. You may then take a trade, get all stressed out from a loss and try to recoup that 5% again... make bad trades.

 

Point being- if you are feeling any type of emotion, good or bad... stop and take the day off. Plenty of opportunities coming.

 

Good points. I agree.

[Bnet 10]

Well the EUR/USD prediction was correct, and some may choose to take profit right about now, and re-enter on a possible retrace. [that you can see in more detail on the hourly]

 

Or you could play it out, but depends on the strength of your psychology. If you do play it out, the stop loss should be moved tight, anyway.

 

 

Remember- if you make ~2-3% let's say, that is *Darn good*. Don't go for a home run.