Welcome to today’s Forex guide! Thank you so much for taking time to read this article.
The currency market had a slow day on Tuesday but the Forex market had great movements in today’s (Wednesday’s) London open.
Just out of curiosity: were you able to catch some of today’s movements? Don’t forget to leave a comment with your trades of today!
I am asking because I twittered the EURJPY short setup I was looking at today via a screenshot. I made some good 60 pips on that trade, versus a risk of 25 pips. Of course the EJ fell an extra 100 pips after that, which would have been nice as well… but nobody should ever complain about a 2.5:1 reward to risk trade (even if it could have been 6:1) now should they?! 🙂 What is a pip or two among friends? In any case, don’t forget to add as at @winnersedgetrad.
That said, past is past. Time to move on! Let us scan the Forex market for new potential FX trade setups.
A quick recap of this week’s events:
1) The EURUSD had a very bearish day on Monday;
2) Tuesday was a ranging day with price action very near Monday’s low. Any attempt to the upside was quickly beaten down and price action confirmed that there was no strength to the upside;
3) Today’s (Wednesday) saw a further drop in the EURUSD.
For quite a long while the 500 Fibonacci area (+/-1.2870) on the day chart acted as a strong support. The last two weeks any bearish movements to lower lows were successfully countered by the bulls, which pushed the currency. After the bottom breaks, the EURUSD then recovered quickly to the upside, but never had the muscle to break the tops.
Today’s price action seems to have definitely cracked that level and the next major Forex level to reckon with is the day chart support and the 618 Fibonacci level at +/-1.2680-1.27.
Therefore, one more move down to that level looks very likely at this point in time. In my opinion the question is when and from where, although price action will need to confirm this Forex setup.
When analyzing the structure of the EURUSD I would say that the broken 500 Fib level and long time support could now be a great resistance level for further down side. The classical break and hook back is always a trade to look out for. This seems to be a seemingly perfect break and potential hook back, but let us first see if price can build enough strength to make it that high.
In trading there is never any guarantee, but I will be watching price action closely if and when price comes close to that area.
What I want to see is a 1 hour candle touching the resistance area and showing reversal signals:
– Via either a huge wick on the top;
– Or via engulfing one hour twins to the downside.
After such a signal, I will put any stop loss 10-15 pips above the high and target the 1.27 area.
Yesterday’s article gave a heads-up for today’s Cable crash trade. I hope you were able to capitalize on that move to the 618 Fib retracement level. If not, do not worry a single second. First of all there are always tons of opportunities in a FX trading week. Second of all, there could be a similar trade setup on the GU sometime soon.
The GU seems to have a similar Forex trading signal as the EURUSD. It too broke the bottom on the 4 hour chart and a hook back to the broken support would seem to be a great resistance area as well.
I will be looking for a similar entry method as the EURUSD on this currency pair as well. The take profit target would of course be different. I will be aiming for the 500 fib of the entire move up which is the 1.5040 price level.
I will be looking for both trade setups during tomorrow’s London or New York trading sessions. The currencies have already made significant moves to the downside today so there could be some retracement and correction in the remainder of today and even tomorrow. For the moment I will let the current market environment settle down. Once the currency creates a new corrective structure of moves, then I will be hunting for the next impulse. Read here more about impulses and corrections.
To follow us on live updates of FX trading, don’t forget to add us to Twitter: @winnersedgetrad. We provide FX analysis, Forex advice, and sometimes even Forex training via our articles.
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