The EURUSD is correcting early NY trade
The EURUSD has moved up sharply in early NY trade after selling off to the lowest level since July 2009 in the London trade. That move lower reached a target of 1.4045 and actually moved through that level to a low of 1.4029 in the London session. As NY entered, however, the price has rebounded back above our 1.4045 target level and took off to the topside.
The pair is pausing at the 100 bar/200 bar Moving average levels on the 5 minute chart - moving above the 100 but so far remaining below the confirming 200 bar MA level at the 1.4090 level (green line in the chart above). The 100 bar MA level is currently at 1.4078 and will dictate the short term bullish or bearish bias. Above is bullish, below is bearish.
A break of the 2 moving average levels should confirm the upside and we will be looking for continuation momentum up to the 1.41117 level. This is the 38.2% retracement level of the 2009 low to high trading range (see chart below). The level also held a corrective move higher today before moving to the downside (see chart above)
On the downside, the 1.4067 level was a low from earlier today. Look for support against this yellow area (1.4061-67) today (see chart below). If it can hold the moves down, the topside corrective push should reassert itself.
Loading ...
The RSI on 4 hr and daily chart are almost 15 and 30 which indicates oversold status.
The bears at this situation risking before a bounce is big question.
But if there is a bounce, what are the levels i can expect?
Thanks.
As mentioned in the post, the 1.4117 level would be a key target above to get through. Until the price can get through the 200 bar MA and then the 1.4117 level projecting the next step is not necessary. The market did hold the 1.4061 support barely and has moved higher which is encouraging but the EURUSD has been bearish and the market is so far not willing to take the price above the 200 bar MA on the 5 minute chart. So the battle continues. Greg
I understand completely greg.
One good thing as you said is 4065 is holding.
But do you look at RSI in your analysis.? I have seen in the past that there has been bounce or pull down when RSI reaches below 30 or above 70 in the 4 hr chart and daily charts
Ask that question during a webinar. Email the question to Shawn at spowell@fxdd.com and we will look to address that indicator.
Greg
Hi Greg,
I need your advice in fixing stop losses on any particular trade.
I am generally comfortable and take appropriate action when the price moves in opposite direction in slow manner.
However the price dips or spikes fast due to any news events, i want to fix appropriate stop loss to take care of such more volatile price actions.
I read somewhere the stop loss can be 2x ATR value. ATR is 0.0112 means stop loss is 2×112 = 224 pips.
Your advice on this will be helpful. Thanks
Greg,
I also read that for a break out situation if the current ATR is 0.0112, then 20% of ATR, It means 0.2 x 112 = 24 pips as stop loss.
But for normal situation 220 pips as per my earlier post.
Please advise me the right strtegy to follow.
Mani
I would suggest watching Fibonacci Retracements for clues. If the price goes below a 38.2% Fibonacci Retracement it could be your stop loss level. I would suggest using the moving averages. I would suggest old highs (if the price is moving up). If you can find that a moving average, Fibo level or old high correspond that gives you more confidence as that level as a stop loss. Trendlines are also good SL levels. I don’t know about the ATR but I would suggest you look at it and see if it makes sense for YOU.
These are the tools I would use and they tend to do a good job.
Greg Michalowski
Greg,
I noticed that your lesson to trade around 100 MA in 5 min chart works very well.
Very little risk is involved in entering short trade once the price reaches 100MA which acts as resistance in a overallbearish trend.
Please tell us if there is a clue when the price is way below 100MA to enter short or long.
I can only think of to refer to Fib support levels to enter short/long when the price is below 100MA. Is there is anything else?
Since the overall trend is bearish, it looks to me no need to enter stop loss when i enter short trade at 100 MA. Ha….ha,,,,
Thanks fo your great education.
Is there any tool you use to know the reversal of current overall bearish trend?
Like elliot wave counts…. etc?
Mani
I use Fib supports. I will also look for old lows. Old levels from a prior time period is sometimes the best target to look for. You have to put yourself in the shoes of other traders. What will they be looking for? The most obvious clues often are the best. Fibonacci retracements are levels the market follows. Simply old lows, sometimes old closes are clues as well. Trendlines are also obvious support levels.
I hope this helps.
Greg