Trading Forex – EUR/USD Fighting with 1.4500

Posted on 05. Jul, 2011 by in Forex Signals, How To, Random Noise

Trading Forex is all about planning your trade and trade your plan. Read todays outlook in order to have an idea of the possible moves in the market.

EUR/USD is currently trading around the 1.4485 level. It´s been a couple of days with sideways action and mixed signals in terms of price action. On the fundamental side, things are pretty much the same, with the recent result from Greece, expectations of a rate hike later this week from ECB along with expectations of a better than previous release on NFP due this Friday. Finally the pair is at a very strong psychological level, which currently acts as resistance.

Trading Forex – Bias

I am not having much of a bias currently to be completely honest. I think what we will see if the pair trade within a fairly narrow range of 1.4350 to 1.4550 until news gets released and we can get a clear cut direction for the pair. The reason for this lack of bias is mostly based on fundamentals as I currently have a very vague idea on which of the two is doing better or worse; needless that I think we will see the tipping point from one of the upcoming news events which should give us a stronger sense of direction.

Trading Forex – Technical Perspective

From a technical standpoint on the one-hour chart, things seem a lot more tradable, when we leave the bias out. We have clearly broken that bit of a bullish trendline there was on the one-hour chart. Additionally the pair has just now started to show a lower high and a lower low along with resilient price action in recent hours. This looks like a No-Brainer short trade.

From the 4-hourt chart we get a better picture of a possible profit target area. I think the 1.4430 level seems to be a possible area and likely to be touched today based on recent price action. From that point on, a long trade could be in the cards. However, with EUR/USD currently trading at 1.4480 and a possible profit target around the 1.4430 level, you need to keep an eye on short term price action in order to get an optimal entry which can maximize the risk:reward of the trade.

Hence I think a possible short is in the cards based on price action but I don’t think we will see a whole lot of follow-through. That is why a long later today might not be such a bad idea after all.

Trading Forex – Ideas

Due to the above mentioned aspects, I am mainly looking for an initial short trade and a possible long trade later today.

I will be paying close attention to short term price action and the time of the day in order to pinpoint a possible entry point. With around 50 – 70 pips in profit target, we should try to get a good entry point so we can get a fairly good risk:reward of at least 1:1.
If we do get a move down during the London session to somewhere around the afforementioed levels, I think a possible long trade could be an option with around 50 pips stop and 1:2 in risk:reward.

Trading Forex – Risk:Reward

Trading Forex in a profitable manner is highly dependent on appropriate money management. We should never look for a trade with less than 1:1 in risk:reward in my opinion. This will greatly enhance your chances of success over the long haul. Trading Forex is about consistency, being able to control the psychological aspect and a well-planned strategy.

Related posts:

  1. Trading Forex – EUR/USD Up or Down?
  2. Trading Forex – EUR/USD Massive Correction
  3. Trading Forex – EUR/USD – A Perfect Play and Upside
  4. Trading Forex – EUR/USD Ahead of ECB Announcement
  5. Trading Forex – Cable Below Key Level

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