This range is being stubborn and the price does not want to break out. We dropped below the 1.4200 to hit 1.4179 but the pair bounced out quickly so that was a false break.
Even though the range is stubborn we have had some good opportunities for profits on bounces off support levels.
I want to clarify something for everyone here: When I do technical analysis and I put on a bear flag or ascending triangle like I did yesterday. I do not by any means for someone to enter a trade before the actual move happens. That is why I titled yesterdays post Patience is a Virtue in Forex Trading because we must wait until the price actually makes a move. If you would have got in before the bear flag broke you would have lost money.
Because the bear flag did not materialize, that is why I said we may have a bear flag because no one can predict the market. However we can read the signals and react. What you could have done is watched the pair bounce of off the support this morning and make an upwards move.
It was a small move but you could have gained some profits. So do not enter trades early it will cost you.
In my own trading I made an error today and I lost 24 pips. Which is not good but it was only 24 because I cut my losses short and because I cut my losses short I am still able to hang on to most of the 91 pip gain I had yesterday.
One of my readers informed me that and I thought I would share that with you. The Aud/Usd is also in a tight trading range that is being tested so keep you eyes on that. The support is 0.8245 and the resistance is .8487 Check Out Forex Crunch for more info
Here is the chart. Note: click on the charts to see our forex charting software
Trade Setup Eur/Usd
Today I am going to explain the basics of setting up a trading using a fibonacci retracement. What this means is that when a price makes a move like it did on Tuesday when it broke through the ascending triangle. There is usually a retracement or pullback while profit taking occurs. Once the retracement is finished the price will continue to move back to the original direction.
If it does not continue the trend than it is a reversal and the pair will begin to trend the other direction.
How to draw the Fibonacci:
In your charting software there should be a fibonacci retracement button somewhere. They are all different so you will have to check with your software. Once you click the button you should put cursor at the start of the price move. If it is upwards move you will click on the bottom. If it is a downwards move you will click on the top.
Then the software automatically plots lines for you to see support and or resistance levels. The is the 1.000, .618, .500 and the .342.
To trade with Fibonacci you will wait until the price reaches a level and wait for the price to bounce off of any of those levels and continue in the direction it was moving. If the pair goes to the 1.000 then there is a reversal and the fibonacci is not useful at that point.
Don’t forget the previous important support and resistance levels as I always still place them with a greater importance than the fibonacci levels.
Do not place your trades with out at least 50 pips of room before a support or resistance level. I will be using 30 pips stops in my trading and if the price breaks the support level in the chart my target is 1.4050.
As always please share your views as I have learned many valuable tips and tools from my readers.
Latest posts by casey (see all)
- Using a Forex Checklist to Develop a Good Trading Habit - September 25, 2017
- Learn why using a 2:1 Risk to Reward Ratio can increase profits - September 19, 2017
- My Personal Trading Plan Reviewed by Trading Expert Kim Krompass - August 4, 2017
Winner’s Edge Trading, as seen on: