Trading Forex – EUR/USD Down to 1.3700

Posted on 13. Jul, 2011 by Jakob in Forex Signals, How To, Random Noise

Trading Forex is all about planning your trade and trading your plan. Here is my view on todays possible market direction. Make a plan and stick to it.

Trading Forex – Bias

First of all, read the analysis on Cable as several aspects mentioned in that post holds true for EUR/USD. First of all, there is pretty much only bad news out of the Euro zone lately, which obviously makes the ERU plummet. In addition to this, the entire situation, along with recent NFP, is inducing a strong risk averse sentiment, which strengthens the dollar. Join in on Facebook for live updates.

Trading Forex – Technical Perspective

Now just as on Cable, this is fairly interesting specially due to the break of the 1.4000 level. However, we have had a very strong move to the downside during the last couple of days which is way a pullback, as always after such a thrust, might be a possibility. However, the pair does seem unstoppable these days and I would clearly prefer to look for a way to short this rather than trying to catch the lows every time after a strong move.

The picture above is just a beautiful technical setup. Yesterday we did have a strong move all the way down to the 1.3830 level and currently the pair trades just around the 1.3990 level. Looking at the daily chart, the pair is setting up for a perfect short trade, in particular for a swing trade, but also for a possible intraday short trade, if we, once again, can see further risk aversion in the market, and pin point the entry around London open.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am only looking for a short trade on this pair.

Just as on Cable, I think this pair is close to a perfect level for a short swing trade with something close to a 100 pip stop loss. However, I would prefer to see if I can catch this on a short term basis looking for a smaller stop loss. Just as on Cable, I am currently in on a short trade and hopefully we will see continuation to the downside from here. If you want to get in, wait for London open and keep an eye on price action. Once again, play it safe and keep risk low as always. Keep in mind we did have a very strong move to the downside and a stronger pullback is definitely not impossible.

Trading Forex – Falling in Love

Never fall in love with a position is a common phrase used by individuals trading forex. It is however, easier said than done. Right now, everyone is screaming short short short, which might be one reason to look for exactly the opposite. Don’t get me wrong, my bias is still to the downside. But when everyone seems to agree there is no bottom for the EUR, one might be inclined to put everything on red (read; over-leverage, over-over trading). Know that you can easily be wrong and this is exactly why we keep our risk low. There is always another chance to get in on a good setup, but only if you have a positive account balance! Trading Forex is about profitability over the long haul.

Tags: Forex Signals, forex trading, Trading Forex

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2 Responses to “Trading Forex – EUR/USD Down to 1.3700”

imi says:

July 14, 2011 at 05:15

Dear Friend
Now the pair is above 1.4240 and during these days you have said down down down all the time.
You know What’s your problem?
Because you don’t care about Fibo levels in H4 Time frame
If you have better perspective about market , you can have better prediction for day trading .
Regards
Iman

COMMENT
Jakob says:

July 18, 2011 at 22:36

Dear Iman,
Thank you for your input. I agree that the fib levels might give some traders a better perspective on the possible directions on the market. Yes I have been sharing my thoughts on further downside, along with the reasons for it. Obviously there is a lot of stuff going on both with the bank stress test, and what not. I have tried to share my thoughts on what might happen, and trade accordingly. When it does not work out, we take a break, and wait for better times. Fib levels might work for you. I prefer to base trading on other elements as I am sure you know. Would I be better off, using Fib levels? Maybe, but it could also be argued, that I would be a better trader if I used RSI, MA, MACD, Parabolic, ATR, Stoch. Etc. The list goes on and trust me, I have been there. I prefer to keep things simple and over the long haul, it works just fine. But sure, I might miss out some places which seems obvious to the ones who do apply fib levels. Anyhow, it is always good to get other trader input and I appreciate you sharing your thoughts here.

ANSWER