Trading Forex – EUR/USD – Upcoming Week

Posted on 27. Nov, 2011 by in Daily Outlook, Forex Signals, How To, Random Noise

Trading Forex can be a tough challenge and specially in days where volatility seems to be over the top. During such times, we need to remind ourselves how important it is to plan your trade and trade your plan. Read todays outlook and know what to look for in tomorrow’s trading session.

We have seen significant downside on this pair during the latest month. EUR/USD is trading close to 1000 pips lower than where is just about one month ago. The pair currently trades around the 1.3230 level, and it looks like we easily could see further downside. Both the latest daily candle and weekly candle closed as strong bearish candles, but we need to pay attention to the 1.3170 level which proved to be a strong level of support last time it was tested. Not only can we expect more news about the worrying situation in the EURO zone, but we also have a bunch of scheduled releases for the upcoming week.

Trading Forex – Bias

There is not a whole lot of reason to look for possible upside on EUR/USD at this moment, other than that a natural pullback could be in the cards due to some possible profit taking, and a heavy level of support around the corner as mentioned above. With that being said, my bias is clearly to the downside on this pair and I will continue to look for pullbacks in order to get in on short trades.

Trading Forex – Pre-News Sentiment

As mentioned above, we do have an interesting upcoming week, with some fundamental news releases which are likely to move the market. My bias on further continuation to the downside is partially based on the expectations for the releases on the upcoming week, where everything, as of now, points in direction of further $ strength; needless to say that this can be changed the split second when the actual figures are released but until this happens, any pre-news sentiment is likely to be in the direction of further downside on EUR/USD.

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Trading Forex – Technical Perspective

From a technical standpoint, this also indicates further downside on EUR/USD. We had a strong daily and weekly close on the pair. For now we will focus on the 4-hour chart, and here things are slightly more ambiguous.

As always, when we have seen a strong move down, a pullback is possible, and something we need to take into consideration. The pair currently trades at the 1.3230 level. We have a key level of support at 1.3170, whereas the next level of resistance is at 1.3340 and then 1.3440. Because of this, if does not make sense to take a short from here (in my opinion), as the possible risk:reward of the trade simply isn’t there. I would prefer to wait for a pullback to the 1.3340 level and look for clues to a possible reversal. If no sign of a reversal is in place, I would wait for a retest of the 1.344 and look for a short. With either of these two levels getting hit, a short trade should be in the cards with a good risk:reward. Specially the first resistance level seems like a good bet, as this would line up with the in-between level of the 10 and 21 EMA.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am only looking for possible short trades.

I will wait for a possible pullback to the 1.3340 level and look for a possible 4-hour reversal candle and then take a short trade with somewhere around a 50 pip stop loss. If we don’t get any kind of reversal candle, wait and see if we get another thrust to the upside and look for possible reversal candles around the 1.3440 level and look for a similar short trade. With that being said, I would prefer to get in short around the first level mentioned. The best scenario would be a move to the upside during the upcoming Asian session and look for a short around London open. If we see continuation to the upside during the beginning of the London session, I would look for mentioned short setup, around US open.

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Related posts:

  1. The Week Ahead
  2. Trading Forex – EUR/USD Before FOMC
  3. Trading Forex – Perfect Trade but Still in Range
  4. Trading Forex – Perfect 1.3440 Retest – Now What?
  5. Trading Forex – EUR/USD Ready for Further Downside

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