Good morning traders. As expected and noted in yesterdays diary entry, we did indeed “have some business with the downside”, right down to the levels we spoke of – 1.1650s.
This daily Head & Shoulders pattern is having a hard time at the moment in following through. However, I wouldn’t discount it just yet as we have seen this type of price action before (see D2 chart) – history has a habit of repeating itself , right :).
For today, I would be cautious as it is month and quarter end and there will be some re balancing taking place in the markets so it is probably better to keep your powder dry until the start of next week. That’s most likely what I´ll be doing unless (as always) we get something on the lower time frames that I can ´scalp´.
EURUSD Daily Charts
Daily 1 Chart
Daily 2 Chart
On the hourly chart, the trend line has been firmly broken to the underside and we are back at the 1.1640 / 50 level. This is also the 61.8 Fib retracement level and the top of a previous range high so we might see a climb back up but as it’s not particularly clear what can happen at these month and qtr. end points – I don’t really have any real conviction either way.
We are not in the guessing game here, trading is about taking risk based on clear and defined probabilities. If I don’t see a clear edge – I stay on the sidelines. This is an extremely important attribute for any pro trader and those looking to learn the business. If it’s not clear – stay out until it is (ceteris paribus as economists like to say).
EURUSD Hourly Chart
To sum up the week, we have had plenty of opportunity to make good money. I´ve noted all the likely directional moves and the levels to look out for and they have all just about played out perfectly. It doesn’t always work out that way and another lesson for those learning the game – act when the odds are in your favour, don´t prevaricate, JFDI. Trust yourself and your analysis and execute your trades when it’s clear because it’s not always this easy.
I´m smiling to myself when I write the word “easy” in any context when it comes to trading but I´m sure you get the point :).
Have a great weekend and as Arnie might have said “I´ll be back” …..on Monday!
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.