News moves markets but trading the news can be a dangerous endeavor. This is because traders never know how the market will react to a certain news release. Many times the market will move before the news is released and then when the news is announced since the news was anticipated, the market will react in the exact opposite way, you thought that it would. So that is why we trade according to what the price is doing not the what the data tells us. Trading according to how the price is moving is called price action and that is the best way to find trade entries. Price action trading uses candle sticks to act as indicators to show you what the price will do next.
So keep track of the fundamental news announcements but don’t make trading decisions based on the news alone. The Eur/Usd moved higher in today’s trading due to the positive housing economic data that drove the market today. The Dollar has been reacting to different data released during news announcements. The best way to keep track of the daily news announcements is to read the daily report at Forex Crunch.
Lets take a look at a possible trade setup.
1 hr chart *Note click on the charts to learn about a trading system
First thing is to remember that we are still in a strong trading range that has been tested several times. Read one of my earlier posts to remember that.
Also that the 1.5000 level just got tested again and failed. So I will be looking for the hourly candle to close below the 1.4966 then at that point would be a an entry short. If the price takes out the top at 1.5062 and the hourly candle closes than we could be out of this range once and for all.
The target to the downside is 1.4800 which has a very strong support level there.
Check out my friends blog the Koala who has a different sense of humor when speaking of the financial markets.
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