Trading Forex – EUR/USD Up or Down?

Posted on 23. Jun, 2011 by in Forex Signals, How To, Random Noise

Taking a closer look at the latest price action on EUR/USD, further downside seems like a good possibility. From the 1-hour chat EUR/USD just made a new and fairly significant new lower low. Obviously the right thing to do, would be to stay on the sideline until we get confirmation of a lower high, and then trade the break of the recent low. However, with the new lower low, the break of the 1-hour bullish trendline along with a vague fundamental idea which is primarily based on yesterday FOMC statement where the chances of QE3 was downplayed.

Trading Forex – Bias

Click on the picture below to see a picture of the 1-Hour chart of EUR/USD. With a drop of just around 150 pips since recent swing high, a pullback is possible, but my main bias for now is further downside. However, it also seems very possible that we might just see immediate continuation further down. Keep an eye on price action in order to get a good entry point.

In addition to a possible short on EUR/USD, a long on USD/CHF and USD/JPY seems to be good possible options as well. With USD/JPY being fairly close to the 80 figure I think this pair sets up very well for a possible long with a fairly tight stop. On USD/CHF, I will pay attention to price action and correlation with EUR/USD in order to catch a possible long.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am mainly looking for a short trade.

Keep an eye on price action around London open and look for correlation and significant closing prices above or below key levels. I would prefer to get in short which would be around the lower part of the Asian session range. A stop above the upper part of the range should do fine for a short term short trade. I would not be too greedy with the profit target, but look for somewhere in the range of 50 – 100 pips. If you get in at the lower part of the range, keep an eye on risk:reward. A key level for now is 1.4290 before possible continuation to the downside.
As my bias is to the downside, I would prefer to not take any long trades as of now, but if we start to see a pullback, keep an eye on the 1.4340 level. I would not trade a long trade, but I would pay attention to this level for a possible chance to take a short trade.

Trading Forex – Money Management

Always remember to keep your risk low. No single trade justifies risking 50% of your account balance. Risk around 1 – 2% of your entire account balance on any single trade, no matter what stop loss you have on the trade. This way you will have several chances to make up for a possible loss.

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    Yes, as the 1.4214 is 61.8% retrace of current move. :-)

  1. I think that sounds like a fairly good idea Brian. If the trade does move in our favor, I will be looking for 50 to 100 pips and keep an eye on price action and time of the day for profit taking.

  2. Hi
    I think for going toward 1.41 and lower, pair should retrace toward 1.4378 to find momentum to go down again, though it is ranging between 1.4275 – 1.4315
    Have a nice day

  3. Yes Imi – If we get a drop within a short period of time down to the 1.41 level, I also think a pullback should be around the corner. However, I don´t think we will see 1.41 today, unless we get some strong fundamental trigger.

  4. Det virker fint !
    Har lige anbefalet din side hos
    Hilsen Mogens

  5. Do you have any interest in BitCoins? Or do you think trading those is too unpredictable at the moment?

  6. Hi Kristian,
    I think BitCoins are here to stay, and there sure is a lot of buzz about this online. I have even seen that people over at ForexFactory post technical outlooks. Actually I do have some so I hope it will see further upside on upcoming months :-) What do you think about bitcoins?

  7. Pingback: Trading Forex – EUR/USD Towards 1.4000

  8. Well, I think it’s interesting, that’s for sure. I am curious to see what happens when the US introduces legislation which I think is bound to happen soon.