EURUSD Day Trades – October 8

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EUR/USD Day Trades – October 8

I am continuing to trade a new forex trading strategy, and was able to get in two trades this morning before switching to another market.

I’ll continue to expand on the strategy and provide more details, in addition to what was shared in the Forex Day Trades – October 7 post.

The strategy works best during the European and/or European and U.S overlap period. Once Europe closes we generally a see bit of a slowdown. As figure 1 shows, volatility is greatest between 6 GMT and 15 GMT. Trades with a strategy such as this should take place inside of these times, as the profit targets are generally pretty small as is, so trading during quiet times means the rewards won’t justify trading.

Between 10 and 15 GMT seems to be the ideal time to trade this strategy.

Figure 1. EUR/USD Hourly Average Volatility

The first trade I took occurred during the European and US overlap period. The trend was up overall (referring to a 5-minute chart), and after creating a new short-term high the price drifted to the side and slightly lower. Such pullbacks provide ideal entry opportunities as risk will generally be quite small.

Figure 2. EUR/USD Trade 1 – 1 Minute Chart

The trade was taken at the lower band, which as indicated in the prior post is just an “envelope” set to 0.01% on a 1-minute chart. The small up arrow marks the entry bar. The initial stop is set at 3.5 pips, but was quickly moved in to 2 pips once the price began to move higher.

The target is based on Fibonacci extensions. Using the prior wave higher to draw our extension, we look to exit at the Fibonacci level closest to the former high (in a downtrend we would look to exit at a Fibonacci level close to the former low). As it turned out, the 61.8% level is right near the former high so an exit is taken and a 3.4 pip profit locked in.

Since there are so many potential trades utilizing this strategy, there is little need to get greedy and try to make more. Take profits and look for another entry.

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This strategy is a “scalping” type strategy. We are trading trends, but for small repeating moves. This means you’ll need a very tight spread to trade the strategy on a 1-minute chart, otherwise you’re better off using a 5 minute chart with a 0.015% envelope to capture bit bigger moves.

Another long opportunity came several minutes later. This one is a bit more complex.

Figure 3. EUR/USD Trade 2 – 1 Minute Chart

Following a strong run-up–some of it was captured on the last trade–there is a sharp pullback which pierces the lower band. Enter long at the lower band with an initial stop at 3.5 pips.

That stop is placed at the time of my entry order. It is a worst case scenario stop and assures I have some sort of loss protection in the market if I lose my internet connection or a scenario like that. Usually this stop will be reduced very quickly, but it is important to place it with your entry order.

Even with a sharper pullback, the price doesn’t move too far past the band. The stop is reduced to 1.9 pips–just below the recent low–once the price begins to move higher again.

The target is based on the prior price wave, which was a big one, so our target is also bigger on this trade utilizing the Fibonacci levels.

As the price moved up toward my target the first time it didn’t hit it, and then pulled back. At this point the stop and target stay where they are. The price then begins to move higher again. Since this creates a new higher low, the stop is moved up to just below this low, locking in at least a 2.3 pip profit. The price continued to consolidate for a bit but then hit the target resulting in a 6.8 pip profit.

This style of trading is highly reliant on the trend. We are keeping risk very small, so if you trade the strategy against the trend, there will be lots of losing trades. For more on how to determine the trend, read Capitalizing on Lower Highs and Higher Lows in Price, as it provides more information on trends.

I also recommend being selective with your trades. There are lots of signals produced, but not all are worth trading. Take only those where the reward is like to outweigh your risk. Also place a stop with your entry order, and reduce the stop level as soon as the price begins to move in your direction. And finally, don’t get greedy with targets. There is lots of opportunity, just take the exit closest to the former price high or low.

For my next post I will attempt more trades on the 5 or even 15 minute chart, as likely many of you will be trading on that time frame.

Yahoo

The Euro is trading higher against the U.S. Dollar on Tuesday as concerns over U.S.-China trade relations drove investors into the safety of lower-yielding assets like Treasury Bonds, Gold, the Japanese Yen and the Euro. Yes, due to the negative interest rate in the Euro Zone the single-currency is now a safe-haven asset.

At 12:49 GMT, the EUR/USD is trading 1.0989, up 0.0018 or +0.17%.

The single-currency is moving higher as investor optimism around the upcoming U.S.-China trade talks dimmed, encouraging them to seek protection in safe-haven Treasury bonds. U.S. Treasury yields fell on the move, making the dollar a less-attractive asset, while driving up demand for the Euro.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at 1.0879 on October 1.

A trade through yesterday’s closing price reversal top at 1.1001 will reaffirm the shift in momentum to the upside. A trade through 1.0962 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day sell-off.

The minor range is 1.0879 to 1.1001. Its 50% level or pivot at 1.0940 is a potential downside target.

The short-term range is 1.1110 to 1.0879. Its retracement zone at 1.0995 to 1.1022 has been acting like resistance for four days. Taking out 1.1022 will indicate strong buying is driving the rally.

Daily Technical Forecast

Based on the early price action and the current price at 1.0989, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.0979 and the short-term 50% level at 1.0995.

Bearish Scenario

A sustained move under 1.0979 will indicate the presence of sellers. If this move creates enough downside momentum then look for a potential break into the pivot at 1.0940, followed by the uptrending Gann angle at 1.0929.

Bullish Scenario

A sustained move over 1.0995 will signal the presence of buyers. This could drive the EUR/USD through the closing price reversal top at 1.1001, followed by the downtrending Gann angle at 1.1009. The next two targets are a Fibonacci level at 1.1022 and another downtrending Gann angle at 1.1025.

The angle at 1.1025 is a potential trigger point for an acceleration to the upside.

This article was originally posted on FX Empire

EUR/USD Mid-Session Technical Analysis for October 8, 2020

The Euro is trading higher against the U.S. Dollar on Tuesday as concerns over U.S.-China trade relations drove investors into the safety of lower-yielding assets like Treasury Bonds, Gold, the Japanese Yen and the Euro. Yes, due to the negative interest rate in the Euro Zone the single-currency is now a safe-haven asset. At 12:49 GMT, the EUR/USD is trading 1.0989, up 0.0018 or +0.17%. The single-currency is moving higher as investor optimism around the upcoming U.S.-China trade talks dimmed, encouraging them to seek protection in safe-haven Treasury bonds. U.S. Treasury yields fell on the move, making the dollar a . (full story)

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