Good morning traders. After yesterdays Juncker comments sparking my ´Italian Job´ theme a little calm seems to have broken out overnight with the single currency backing off the 1.15 level and moving back up to the 1.1580 level as we speak.
That’s not to say the euro is ´safe´ and headed north from here as nothing has changed. The market is waiting for further EU response to Italy and assessing the bond spread between the German Bund and Italian BTPs.
I´m sure this one is going to run a while yet but for now our overall theme of higher prices for the eurusd is intact unless / until we get a daily close below the 1.15 key level.
EURUSD Daily Chart
EURUSD Hourly Chart
How to trade the EURUSD 5m chart
As nothing has changed our view I thought I would show you how I use the 5m chart to take intraday entries. I know many of you won’t be able to be at your screens full time but for those of you who are, this is my main trading technique – and one that provides plenty of opportunity to make good money.
EURUSD 5m Chart
First look at the hourly chart above. We already knew 1.15 was a key level so we were on the look out for a test down here. However, price started to move down from around 5.30am UK time which is a bit early for most traders to get on board.
So we were waiting for any sort of pullback to get in the trade. This came at Point 1 on the 5m chart (above) at around 9am. Price came back up to retest the 1.1550 prior high and formed a double top. The fact it was also a ´50´ level was also significant as I’ve mentioned before. If you got on board there you could have ridden it down to the low test at around 1.1504.
Price then hung around the 1.15 level not making a break of the big figure level, with the hourly chart making a doji and the 5m chart giving us a retest of the low where it came right back to close above the previous low staying above the 1.15 level. This was an opportunity to get long here intraday at Point 2 (its a classic retest reversal pattern I use on the 5m chart).
You could have ridden that trade all the way up or taken profit wherever you saw fit depending on your money management technique. We had a 3rd possible trade entry at Point 3 where price was forming a rising flat top wedge with an decent entry at 3 with the risk reward expectation of a break through the top.
All 3 of these intraday 5m entries had good risk reward associated with them so were all worth a shot. While we never know what can happen, trading is about the probability of a positive outcome and I know from experience all these were worth the risk.
These 3 trades had the possibility of making around 100 pips intraday which, not wishing to sound too ´salesy´ , is a fantastic daily result. You do this a few days a week and … well…. I´m sure I need say no more.
Hope that helps to show you how I trade the lower time frame based on my higher time frame and macro view.
I know I can only give a cursory snapshot here and you need to understand pattern expectation rates, levels and risk reward parameters I use but if you want more information on my techniques just give me a shout at firstname.lastname@example.org
Good luck with today traders. Talk again tomorrow :)
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.