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.
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.