Mark Wogan: Event risk and confidence

Good morning traders.

Hope you all had an enjoyable weekend.

Before we get into this week and specifically today’s levels, let me give you a brief update on the past two weeks.

First and foremost it has been particularly difficult to trade given the political event risk that has dominated the price action.

We had the US midterms and the ´politicized´ FOMC followed swiftly by the UK Brexit cabinet ´deal´and its aftermath. Italy and its debt issue has been somewhat sidelined by the bigger fish being fried.

These events have cast a long shadow over the landscape for the eurusd and if you have had a tough time, don´t sweat it. At times trading is a tough and even more uncertain game than usual when politics converge like this.

One point I do want to make however, is that whatever the event risk, price continues to react at certain levels.

It is incredibly rare for price not to respect key levels of support and resistance. Even if we have a completely left field day where nothing ´holds´, the next typically comes back into line. And that is how the eurusd has traded over the last 14 days or so.

The chart below is marked up with key levels that I have posted each day. The thing that should stand out is how well they have anticipated price action.

I doubt anyone will have been brave or adept enough to trade them all in the face of the uncertainty we´ve had but it just shows you that, whatever the external environment, S & R levels still form the basis of good trading decisions.

Discipline and confidence pay dividends.

I´ve added a pip count to some of the more easily tradable levels I´ve posted and commented on. This is  not to suggest that this is what you should have made but to give you confidence in the Support & Resistance levels I post.

I would encourage you to take a close look at all these levels and the associated price action. Even where I´ve not added a pip count you should see that there were plenty of other opportunities that set up. I have also assumed no overnight positions – which could have provided even more profit.

Sure there were also losses. But I have a standard 10 pip loss on all my trades in this strategy so even if I lost on 5 or even 10 I would still be comfortably in profit.

If you are a day trader, it should be clear by now that intra-day S & R is the basis for you to become a successful trader. But… you have to have the confidence to take them.

Ok so what’s on the cards for today and this week.

The Daily Chart

We talked last Friday about the weekly chart candle that was setting up and we´ve had a strong reaction already on Friday to a move off the 1.12 lows and 61.8% Fib.

Looking at the daily chart now suggests a test of the 1.15 level.

By the way this move was helped greatly by some comments made Friday by Richard Clarida the Fed vice chair noting that in his view the neutral rate was close and that the Fed should now be more data dependent.

This is potentially a big deal with regard to forward guidance and his comments have added a more dovish tone to the more recent hawkishness coming from the Fed.

The Hourly Chart

S & R looks fairly straight forward as noted.

I´ll be taking them – will you?

Have a good one.