By Casey Stubbs– Winners Edge Trading: Follow Casey on Twitter.
Hello Traders I hope you all are having a great weekend. Welcome to the review of the Eur/Usd pair. I have been studying the Euro Zone and the United States, economies, news, charts and data trying to give me some clues as to what is going to happen next so we can trade it 🙂 After all that research I have just come up with a one word answer: Perspective: The situation in both the United States and Europe can be spinned anyway you want based on your perspective of how you view the news and data. I am actually tired of trying to figure it all out, it is a mess on both sides and I am not going to spend my time making a case for either direction because it doesn’t matter anyways because the market will change its mind as soon as I get it all figured out.
How to get on the right side of the trades:
Ok so now that we know perspective is important we need to figure out the Markets perspective on things, yes I know the market doesn’t think but it responds to how the world is viewing a certain situation. So the market is following the views of the world overall on any given entity that is being traded. In this case the Eur/Usd. I have been calling a Euro Bounce for the last two weeks in my weekly articles I also state the the media is Fickle in last weeks report. (You can also see the charts I posted there as well.) What this all means is that the we should follow price and Market Sentiment together. Here is the Definition of Market Sentiment as defined by investopedia:
The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of securities.
To go back to my main point it means it is the current perspective of the people that are trying to move the markets. This can change in a hurry, Right now all eyes are on Euro Destructions, but please do not forget that the market has a short memory and can be talking about how bad the U.S. is tomorrow. Especially since the U.S. Debt problem could actually be worse than the one in Europe, and once the sentiment changes, all you will hear is negative news about the Dollar. Now I am not saying it is going to happen it is not a prediction, but rather I would like you to begin to observe how the media flip flops, and how the media reacts to certain things. The financial media is reactionary and they will focus on what they think is a story, that is why they are always jumping around. They will always try to find the next new thing or the next big thing, and therefore the sentiment is always changing.
Because of this lets train ourselves to look for clues as to how the market changes or how it reacts. Be thinking when hearing news try to think about different angles, try to expand your viewpoints and look at things from different perspectives.
Important: News is a joke to me and I only follow it to determine the current sentiment to help guide me in the direction of the trades I am taking.
Important: Watch Price and support and resistance, see how price reacts and then trade it in combination with the market sentiment. Sometimes it can pay off big time to be ahead of the pack when reversals are coming and sometimes it can hurt you big time because you are trading against the grain.
Current Sentiment Items that might help you in your quest to see which way the tide is turning.
- More Hints at Qe3 coming our way soon, Very bad for dollar as reported by Forex Crunch.
- US Debt is in the worst position ever as reported by Bloomberg
- Bailout Economics do not work as reported by Zero Hedge
Now to the Most important part: To the Charts!
Ok so last week I reported strong support with the weekly charts and boy did that hold up in a big way. We have an extremely strong bullish weekly candle. I am not going to write out my analysis because the chart I prepared does all the talking. I am going to lay out a top down analysis for you so you can see exactly how I prepare for the week of trading.
So based on the chart I am very bullish until this weekly bullish candle gets taken out to the downside. That could happen next week I do not know but I know that I am going to follow the current trend.
Take a look at the daily:
Now I am going to post two different Hourly Charts for you to look at.
One More Hourly Chart:
Summary: So that is my take on it, my strategy is going to be to watch those support zones, and look for longs when I see a bullish candle close in the direction of the new trend. I might be dead wrong, there could be earth shattering news to crush those levels. But that is my plan and I am sticking to it this week. Please share some comments, links, ideas, etc. I want to know what you think? What is your plan, be critical ruthless evaluation is how I have improved myself, it won’t hurt my feelings I promise.
I have worked hard on this article and if you think it is worth anything to anyone please share via Social Media, Thanks.
Some other reading material that might interest you:
- An exact opposite opinion Eur/Usd from my friend Jakob at Trade Profits (we can’t both be right :))
- Technical Analysis From Forex Abode
- And Tim Knight Running with the Bulls
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