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EUR/USD Finally Break Inverse Trend Channel – FX Analysis 3/29/16

Inverse Trend Channel Breaks Higher

First, I hope everyone enjoyed their extended weekend. Getting into the Euro, all last week I talked about the inverse trend channel we had forming on the EUR/USD and the likelihood that it would break higher. We did have one long setup on the EUR/USD last week, but it only managed to give up around +20 pips before the trade was closed according to our trading plan. Yesterday’s break higher does not quite satisfy our criteria for being a valid first push and therefore the directional bias still technically remains open. For this week I will continue to be biased long and will continue to feel that way as long as we do not see a close below the 1.1150 level. To the downside that is a key line in the sand that if broken and held below would shift the bias. Currently the COT data continues to support the long side of the Euro with buying pressure steadily rising as well. As far as short term manipulation points are concerned, I have one upper and one lower listed level to start the day. Unfortunately we do not have a lower level that is closer to the price to give a long setup. If we do break above the first upper level, this would also be a valid level for a backside stop run long. 

EUR/USD Chart - March 29th 2016

Pound Gives First Push Up 

To start the week of trading, I will be looking for the second push to the upside on the GBP/USD. I do think that this cycle has a lower chance of continuing to the upside given the Pound weakness we have seen for so long. Looking at the COT data it continues to show a heavy short position with no shift higher. With that being said cycle is not the reason we take an entry, it is only there to give us a directional bias when clear. As such, we still need to see a stop run of our lower manipulation point to trigger a trade. As I mentioned in the members daily market preview video, we could also consider a backside long off of yesterday’s highs if we were to break above them.

GBP/USD Chart - March 29th 2016

Forex Market News For March 29th 2016

US Consumer Confidence 10:00 AM Eastern: This did have a 15+ pip spike about 7 months ago but I would still carry into this trade. The main reason is the spike was distorted IMO. This spike I’m referring to is from September of 2015. Notice how the market moves up about 10 pips only 10 seconds before the news, thus exaggerating the spike down when the better than expected news is released. Additionally we have had deviations just as large and no reaction over 10 pips. Because this is in a bit of a grey area I would close the trade if I was break even or negative within a few minutes of the release. If however the trade is in the green I would allow it to run into the news.

US Fed Chair Janet “You Got Fleeced” Yellen 12:20 AM Eastern: Yellen will be giving a Economic Outlook Speech at 12:20 and I would definitely be out of any trades going into her speech. As with most speeches, they could be a dud but they could also spike the market 50+ pips in a few seconds on the right/wrong comment.



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