By Casey Stubbs
The Eur/Usd is the most traded currency pair in the world and today I am going to do a detailed analysis that will help you trade this pair in the near future. Please Share this Detailed Analysis to spread the word on this EUR USD analysis.
Recently the news for the Euro has been good and that is why we have seen a bounce in the pair recently. Fundamentally and technically strong the Euro has moved through some key levels to show possible future bullish momentum. It is always difficult to be sure of the fundamental analysis because sentiment is what is needed to be tracked not the news but rather the response and current market sentiment. For example the current spectacle going on in the United states with the fiscal cliff should make the Dollar weak but in actuality it might make the Dollar stronger because of risk aversion. That is why it is important to hear what traders are currently thinking and believing about a pair but not a good idea to make trading decisions based on that information. Fundamental analysis is always changing and based on interpretation which makes it difficult to make successful trading decisions based on fundamental data alone. That is why a plan that details fundamental and technical information is the best way to set up a successful trading plan.
Lets start out with the weekly analysis and we can see that the market is moving sideways and the 200 period simple moving average supports this by showing flat and it is barely starting to point upwards. See the chart below. You can click the link to get the full picture.
After Studying that chart look at it again and you will notice that the current momentum is bullish and it has been going up for many weeks. So as traders we want to make money so we need to ask ourselves some questions.
Which way is it going?
How can I profit from it?
We can see the bullish momentum is strong but for how long and if it will continue how can we get in at the right time so that we can profit? I like to find some key areas for entry that
will help our timing so that we can profit from the trade. As I am doing this analysis I am thinking about taking long and short entry areas at the same time.
So we know the price is bullish but also slowing down moving into resistance. So do we short it? I say no for two reasons.
1. Because we there is slow down but not a clear sign of reversal. Many times the market will slow before continuing on the current move.
2. Because we just broke a key level and now that level is a clear level of support that has not been broken yet I would rather wait for a pull back and then go long.
This is how I think about trades so I hope it helps you out in your analysis.
Now I am going to go back to the daily to show potential setups for longs since we are currently bullish and there is current bullish sentiment. I have setup a chart that has 4 potential areas for entry. One tip I want to share with you is if you plan your trades in advance and you know where you will get in, where you will get out and how much you will risk then trading is much more successful, fun and profitable.
I have drawn this points using fibonacci retracement tool which is a great place to place entries because it is a high probability set up that many other traders look at.
These levels will help you also to identify good areas for stops as well if you are planning to go long.
Where to target these trades?
I am going to jump back to the weekly chart to help me find great targets for these trades and also identify potential reversal trades. I want you to notice the .50 Fibonacci retracement area in the chart below. This level shows a great potential target as well as short setup. This level has 3 key points that you should notice, which I believe will make it a high probability area.
1. The .50 fib
2. 200 Ma
3. Key previous resistance area
With those 3 additional signs I will then be more confident in my setups.
Thanks for reading today and please leave a comment to share your perspective on this trade. What would you do differently? What levels are you looking at? Please share this post using Twitter by clicking this link.
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