EURUSD finding some profit takers
Written December 29, 2011 at 8:42 AM EST by Greg Michalowski
The EURUSD has broken above intraday trendline and the 38.2% retracement at the 1.2889 area. This came after some up and down trading in the early NY session during which a new 2011 low was made (below the 1.2873 level). The 100 bar MA on the 5 minute chart is the next upside target for the pair at the 1.2909 currently. This is near the 61.8% of the days range.
The action today is more balanced. The price trend did continue in London morning trading but the inability to keep the price below the low for 2011, seemed to have scared some shorts and we are seeing more dip buying in the early NY session. Traders will be watching the 1.2886-89 level in early trading and also the 1.2873 level to see if buyers continue to support the dips.
Categories: Forex Trading |
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Greg I am having trouble last couple of days loginning on your morning commentary ? it keeps saying the stream is not available ..anyone else having this problem..
Greg,
Your analysis on eurusd posted today is good for daily traders.
The near term target for euusd is 1.2760/50.
People following proper MM rules or entered already around 1.3100 levels will not exit at 1.2975 levels as you mentioned.
They will wait for much lower target.
I have been telling you this. Pl post larger time frame chart targets too as this will help weekly traders.
Daily traders normally tend to loose capital. very quickly.
I will check Michele
“People following proper MM rules or entered already around 1.3100 levels will not exit at 1.2975 levels as you mentioned.”
They will if they think the failure of the break of the 2011 low was of significance. I think the level is an important level and the market has agreed today so far.
Thanks for your comment. Most traders we have are not weekly traders.
If you want my long term analysis, resistance at 1.33877 at 38.2% of the move down from November. The target below is 1.2588. This is the bottom channel trendline connecting lows. This is not a great risk/reward for traders with no position right now. I would not do a “longer term” trade given this view.
Longer term, when the price moved below the 100 and 200 day MA at the 1.4069 area that is where traders should have gone short. Are you short from there?
Most traders lose because they do not define risk, limit risk and as a result they have increased fear which causes them to trade poorly. Traders who understand risk will always do better than those who put on a trade and hope.
The price failed to break 1.2857, I agree fully. It does not mean that it is not going to break at all. Failure to break support will find buyers. Yes i know this theory.
It will try to retrace a bit ( UNTILL BUYERS FEEL EXHAUSTED ) and then break !!
Day traders for sure will notice the failure to break 1.2857.
I follow various methods in addtion to your teaching. Those various methods include ABCD analysis, and some standard indicators. These are suitable for weekly, monthly charts too.
I try to follow MM rules ( for very long I have been trying and still not succesful ) . In line with your statement, If i entered short at 1.4069, my stop would have been 1.4250 ( swing high ). My profit exit would be as follows :
First profit exit : 1.3890 ( 1 : 1 RR )
Second exit : : 1. 3700 ( 1 : 2 RR )
My next entry ( only short ) would be after retracement.
And for many many days, i prefer to short only this pair. Whevenver I entered long based on some long recommendations by analysts, I loose or profits will be less.
I would rather request you to advise taders to trade ( or look to ) short only based on daily chart .
I am one of the sufferer to follow 5 min chart.
I agree that traders should follow risk analysis to exit, but as long as entry is correct and in the direction of major trend, onwe would have no fear of loosing.
I don’t just use the 5 minute chart but use it in conjuction with the hourly and the daily. That is important to understand. .It is a tool I follow and use and it gives me important clues about the markets direction and behavior.
Anyway, you mention your target profit levels. For me, I would prefer not to randomly have exit levels at 1:1 or 2:1 of my initial risk. This is too random from me. I prefer to have targets progress and reach technical levels like MA, trendlines or Fibo levels and let those tools tell me to get out (whether long term or short term0. That is why the longer term target is the bottom channel trendline. EVERYONE can see that. Your profit exit is specific to you and you alone. But if it works for you, great.
I try to teach traders that the forex market is visual and takes clues from technicals on entry and also on exits. I realize that the market trends but corrections can be harsh. Money Management and Risk is important and to have this discussion without bringing it up is not right. For example, on your initial trade your 190 pip initial stop should not risk more than 2-3% of your entire capital. If the trade you put on risks 20% of your capital, I would not be in favor of that approach. Few traders recover from the dreaded blow up trades. I have seen many many traders who have done that trade because they were so sure, and never recovered. Believe me, it may work for a while, but it catches up with most traders.
I know you have a bearish bias and have always had a bearish bias, but what I worry about and warn people about in webinars and in my book is what happens when the price corrects like the 900 pips in October? This is when traders tend to blow up and lose more than 20% of their capital. That is what tips the scales from success to failure.
I like to listen to what the market is saying and sometimes it is not always down/bearish. I remind you of how all those traders who had the EURUSD moving to parity when the 1st Greece bailiout occurred when the EURUSD was at 1.1900. Go back to that time, re-read papers and the bias was down, down, down. The bias was as bearish as can be and what happened? The EURUSD rallied to 1.4200 from 1.1900. That blew up many traders along the way.
Anyway, the most important thing to understand is RISK. If you risk 2-3% you have a chance to survive whether you trade short term or long term. If you wander away from that MM, you are likely to have a difficult time. You control risk by defining risk against a techncal level, and using the position size that is congruent with the stop loss level. For example, if you risk 200 pips with 1 lot position that is a loss of $2000 if stopped out. If your account is $10,000 that is 20%. That does not make sense to me. Instead, take 3% of 10,000 and that equals $300. If you risk 200 pips then do 1.5 mini lots. So if you get stopped out you will lose $300. or 3% ($1.50 per pip x 200 pips). You live to trade again.
My focus on this blog is to look at the market now and tell readers what is the bias now and what levels are important today. Today the bias was up above the 1.2873 level. When the market approached the 100 and 200 bar MA on the 5 minute chart sellers came in. That was important. Then the market broke and moved toward the next key target at 1.2940 area. If a trader has a bias to sell, 1.2916 and 1.2940 are levels to sell against. I give the reasons. I put the charts. I hope that what I tell is beneficial to traders who are learning to not trade randomly without defining risk. I focus on defining risk. That is it.
Thanks for eloborate explanation. Sure people will read and benifit from this argument. I love to orgue with you always and get maximum from you. lol.
The onething which I failed to get from you is weekly analysis.
One per week. In the start of the week. That should be fine.
Now coming to technicals :
On daily chart in eurusd.
The system what I have tells me as follows :
1) short entry 1.4367. stop loss 1.4550. Technical take profit level 1.3765. ( This is nice )
2) short entry 1.3700, stop loss 1.3950. technical take profit 1.3400. This is ok trade but very good )
3) buy at 1.3675 stop loss at 1.3150. Technical take profit 1.3750. This is not at all a good trade if I follow technical exit for profit. If I follow MM rules, then my profit exit would be atleast 1:1 . It is ok, but still this is not a good entry b’cos I am trading against the trend !!!
4) Short entry at 1.3800. stop at 1.4000, Technical profit exit at 1.3400.
5) Short entry at 1.3361. stop loss 1.3550. No signal yet to get out !! But my ABCD analysis says target could be around 1.3750/60.
In the mean time if my other indicators or MM rule says to get out, i shall get out.
From the above you can see the short entries always benifited but not long entry.
secondly in higher time frame, no big noice and have larger stop los to play with.
Thirdly I do not enter at one level all volumes. I enter at stages and average the price. I allow up to 8 % stop loss. some times ( in olden days ) i allowed 25 % stop loss. I know I did stupid in the past.
Point no 5. Please correct ‘ABCD analysis exit could be 1.2760/50 and not 1.3760/50.
Thanks Greg.
Greg,
I am planning to invest in xau/usd ( not trade ) through fxdd platform.
I shall greatly appreciate your daily/weekly analysis on long term.
Thanks.
Greg,
If you find time on monday to post an anlysis in xau/usd it would be fine Greg.
I am leaving out of the country on 3 rd jan. Before that I need to decide investing in gold, for that i need to deposit in my/wife ac. with FXDD.
I need to do all before I leave the country on vocation for 3 months.
Thanks Greg, for the analysis.
I will do it over the weekend Shri. I am putting together a year end report
Thanks! It is my pleasure to help…Peace and good fortune in 2012!