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Diary of a Trader: EURUSD for the week ahead

Hi, to add value to The Armchair Trader and the services we provide, we are kicking off a trading section where I will post my charts on a regular basis (usually each morning ready for the London and New York trading sessions) noting my view of the likely levels to watch out for on the EurUsd currency chart.

Whilst my comments and trading ideas will be based on this instrument, once you´ve followed the way I trade for a while you will see that the methods and techniques I use are equally applicable to the other currency majors and to other asset classes.

First let me give you a brief summary of the methods I use to give you a little context.

I am first and foremost a “price action” trader which means I don´t use many standard indicators such as you might see on other trading platforms.

My view is that as most of these indicators are generally lagging the market  (MACD, Stochastics and moving averages etc.) they are at best useful only for ´confirmation´or for adding confluence to a level on the chart I am interested in taking a trade at.

Secondly you´ll see that my charts incorporate a line graph overlaying the more standard candlesticks.

I use this form of line graph as it makes viewing the levels much easier than just simply using candle patterns.

The line is based on the closing price which I view as being the most significant level of any time period candle and the level at which you have the highest probability of price moving from. Whether that move is up or down depends on the higher timeframe bias and the structure that forms during the day.

The horizontal and diagonal lines you will see on my charts are colour coded. The blue lines are levels based on the weekly, daily and 4 hour charts (W, D,H4) and the black lines are based on the 1 hour and lower chart time frames. As such, I view the blue lines as the dominant level that price is most likely to react at.

I could go on at length about my trading methodolgy etc. but hopefully this will suffice for now.

The EurUsd chart for the week commencing 16th September

The Daily Chart (D1)

The first thing to note is that the daily chart shows that we are basically within a range essentially bounded by 1.1750 at the top and 1.1550 at the bottom (strong blue lines on the chart). The strong reaction from the top levels on Friday may indicate we still have some room to test lower but any move back to the 1.1550s should be watched carefully for a key reversal and move upwards in price.

We may also be building a form of complex inverse head & shoulders pattern and a move higher from the 1.1550s level may provide a good risk reward trading opportunity.

However if we break this lower range band – I will be watching for any type of retest reversal of this level to trade short. Similarly should we break the top of the range (1.1750ish), I´ll be watching out for a break followed by a retest to get long initially, looking to test the 1.1843 level as noted on the chart. I´ve added some Fib levels and taking the fib from the top formed in April this year to the low in August we can see some confluence of levels.

EURUSD Daily Chart

The hourly chart (H1)

The H1 chart is my main chart timeframe for framing my intraday trading and as such is marked up with quite a few more levels.

This chart enables us to see more detailed price action and consequently it gives me a clearer view of where price might be going and where it is likely to react for intraday trading.

My focus as we open on Monday (Sunday night to be precise) as it is every week will be to watch how price moves during the Asia session (and early London session) with an eye on the range that is formed on the Monday.

As the week develops I will also be watching how price reacts at the previous weeks highs and lows as these levels can have a critical influence on high probability trades (see the red line).

EURUSD Daily Chart

I will also be watching closely the 1.1560 ish – 1.1580 level for reaction.

Similarly the 1.1600 (Big figure) level could be key for the upcoming week.

All of the levels posted have a likelihood of providing good support and resistance (S&R) and the key is to be ready to trade dependent on the specific price action and the time of day once these levels are hit.

As we progress during the week I´ll explain how I form trades and why i choose to be long or short and note the key levels on my radar for each day.

There’s much more I could add but as this is our first posting I´ll leave it at that and will update the charts and comment as the week progresses.

Hope this helps and please feel free to ask any questions through the comment section below.

Please note: All opinions expressed above are from the author and not necessarily shared by The Armchair Trader. All financial investments involve an element of risk. The value of your investment may fall as well as rise and you may get back less than your initial investment. With Spread bets and CFDs your losses may exceed your deposits.

Mark Wogan

Mark Wogan

Hi. I started my investing / trading career in 2000 and since 2011 I have been trading on a full time basis.

My focus here will be the currencies and in particular the EurUsd pair and I will post my charts on a daily basis marking up the levels I´m interested in and comment on the bigger picture context and anything else I´ll be watching out for during the day.

I also do a little coaching on a one to one basis so if you´re interested in learning how to trade just give me a shout and we can have a quick chat.

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