We just had a good week trading the Eur/Usd and I think that we are headed for some more great moves coming this week and beyond. Yohay writes that forex trading slows down in the month of August and we should see some more volume in September.
On Monday we have key levels that the Eur/Usd will be challenging, and if we break the resistance levels we may see some big moves.
For resistance levels we have 1.4377, 1.4448 and 1.4721 both of those levels are key and if we see them broken we could see serious trend momentum. The level at 1.4721 is the pairs high price of Dec 7, 2008
The Support levels are 1.4274, 1.4200 and 1.4050
The current trend is in favor of the Euro so we will be looking for that trend to continue but we will be ready to adapt if the pair gets stopped by key resistance levels.
Trade Setup and Rules:
First we will be watching the first resistance level of .14377 and if that level gets taken out the target is 1.448. So the plan is to enter long somewhere around 1.4385 and put a stop at 1.4356 which is 31 pips. Make sure that you are only risking %2 of you account value. The target level is 1.4448 which is 63 pips. That gives us a 2 to 1 risk to reward ratio which is important to maintain in your trading to help increase profitablity long term.
IF the pair bounces of the 1.4377 level look at the support level of 1.4200 and watch for the pair to bounce off of that level and continue to move up. If the support level of 1.4200 does not hold look for a target of 1.4050.
Another idea for trading is to open two lots and let the first lot hit your target and then you can take profits and at that point move your stop on the other lot but keep it open to enable the pair to continue to run and you can gain more pips if the pair will have a longer run.
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