Trading Forex – EUR/USD – A Perfect Play and Upside

Posted on 06. Jul, 2011 by in Forex Signals, How To, Random Noise

Trading Forex is all about planning your trade and trading your plan. Yesterday’s plan played out perfectly and should be a good reminder of how to put a trading into actionable trading. Read todays outlook in order to have an idea of the possible moves in the market.

Yesterday, we took a short trade at 1.44821 and picked up 50 pips to the downside. As mentioned in the post yesterday Trading Forex – EUR/USD Fighting with 1.4500, I would be looking for a long around 1.4430. We did get a bit lower on EUR/USD but through short term price action we were able to catch it on the way back up taking a long at 1.4420 and are so far having around 40 pips in profit with our stop loss at break even. Today I think it is likely we will see a some more upside due to a possible pre-sentiment buying into EUR based on expectations for a rate hike tomorrow. Lets take a closer look.

Trading Forex – Bias

My bias is pretty much the same as yesterday. We are likely to see further resilience in the pair without any strong move either to the upside or downside, before we have one of the key fundamental releases which should prove to be the tipping points for a clear cut direction. Take a look at the 15 minute chart below to get a feeling of the current choppy market.

The drop on EUR/USD yesterday was fuelled by a warning from S&P, but nonetheless the pair stayed in the expected range. Clearly the pair reacts highly to even the smallest news but with a short term effect. For now, my bias is pretty much the opposite of yesterday, mainly due to a possible pre-news sentiment of buying into EUR based on the expectations for a rate hike tomorrow, and also somewhat based on the expectations of a worse than previous release on ISM Non-Manufacturing PMI from US which is coming out later today. Keep in mind that we do have a bit of a pre-news sentiment conflict here, with the rate hike outlook and expectations for a better than previous release on NFP this Friday.

Trading Forex – Technical Perspective.

As mentioned yesterday we did have a break of the main trendline which gave us an indication of a possible short trade yesterday. We did get a drop down to the mentioned level around the 1.4400 level and then the pair bounced. Click the picture below to see the 1-hour chart.

Now just about an hour ago, we had a break of the bearish trendline, indicating possible further upside. However, it is currently trading at a key level of prior support and now resistance. However, I still think further upside is in the cards.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am mainly looking for a possible long trade, and a short trade later today could be a possibility, as I think the pair will stay in a fairly narrow range until we get one of the key fundamental news releases.

We are already long from the position we took yesterday, but for those of you still looking to get in on a trade I would pay close attention to short term price action and look for a possible long with 30 – 50 pip stop. I think we easily could see the pair re-test the previous high around the 1.4560 level which would give you at least a 1:2 risk:reward ratio.
If we do get a move to the upside and re-test recent highs I might be looking for a possibility to trade it all the way down again. Pay attention to the time of the day, along with price action.

Trading Forex – Simplicity

Trading Forex is difficult but mostly because of psychological reasons where traders tend to over trade, over leverage, not taking responsibility, etc. Trading Forex in a profitable manner is about keeping things simple and being able to control the psychological aspect.

Related posts:

  1. Trading Forex – Perfect Trade but Still in Range
  2. Trading Forex – Cable Upside?
  3. Trading Forex – Perfect 1.3440 Retest – Now What?
  4. Trading Forex – A bit of Possible Upside
  5. EUR/USD – Potential Upside?

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