EUR/USD Breaks Daily Chart Trendline Support – October 26th 2015
EUR/USD Breaks Trendline Support
The EUR/USD has been forming a lower trendline starting with the overall lows in March of 2015. With Friday’s continued aggressive selling the Euro broke and closed below that support. Anyone that knows my forex trading strategy knows that I don’t put a great deal of stock in trendline support or resistance as it doesn’t tend to accumulate as much liquidity as horizontal levels. With that being said what happens this week is going to be rather important to long term direction as this will show just how much momentum to the downside the Euro truly has.
What will I be looking for to start the week? To the downside the 1.1000 level is the obvious key level. At this point I would call that the line in the sand. If we can break and hold below that point then the March lows will probably be tested once again. To start the week I will leave directional bias open because the lower level is so huge. Even if 1.1000 does eventually break I would still love to take a stop run long from it. Remember, I’m only trying to take a small piece of the pie and therefore if I can get 40-50 pips then I can take a trade using 2/1 reward to risk ratio. That would more than likely be a counter trend day trade but still worth considering with the significance of the level. I also have two upper manipulation points listed in the chart as I would obviously consider a short setup if a stop run occurs from any of the listed points.
GBP/USD Gives Expected Second Push, Looking For Third
As I mentioned in Friday’s forex market analysis, the GBP/USD had given a first push down and we were looking for the second to occur. That move did occur on Friday and today we will be looking for the third push to the downside. Every time we have a market cycle I always stress the fact that market cycle is not the reason we take trades. I stress this fact, as many times market cycle will fail. Our protection when this occurs is our actual catalyst for entry, which is a stop run from a high probability point. If this does not occur then we do not enter the market regardless of having a valid cycle.
Today I have 2 upper manipulation points from which I would consider a short. To stress the point, if the market breaks through these upper manipulation points without providing a valid confirmation entry then a no trade will be the result. This is our protection for when/if market cycle does not hold.
Forex News For October 26th 2015
German IFO Business Climate 5:00 AM Eastern: This is the first of two forex news items that are right on the edge in regards to creating a 15+ pip spike. I do not carry trades into news items that can spike the market more than 15 pips. This has been right on the edge and therefore I would probably be more aggressive about taking a trade closer to the news. Also, whether I held into the news or not would be determined by how far from break even I was. If I was sitting near break even or negative I would probably exit before the news. If however I had a few pips of clearance I would probably hold into the trade. This month 107.8 is the expected number.
US New Home Sales 10:00 AM Eastern: This is another news event that is right on the edge in regards of being at or over the 15+ pip spike market. I will treat this the exact same way as I wrote about in the German IFO comments above as it moves a similar distance. This month 550K is the expected number.
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