Trend Continuation Forex Day Trade EUR/USD 03/08/2011
Hey everyone. Welcome back for another day of trading. I hope every one’s day trading is going good as well! 🙂 Today we started off with some horrible stagnant price action in the forex market…..especially in the GBP/USD. Refer to your GBP/USD chart around 8AM EST to see what I mean. So as we sat there waiting for the market to make a move, I said I would need to see the market make a decisive more before considering a trade. Fortunately the EUR/USD did just that.
Right around 9:30AM EST we saw the EUR/USD break a short term trend line to the downside on the 5M chart. This was enough to peak our interest in the forex room and get us watching. As with any trend line break I will not chase the forex market. Therefore I simply wait for the market to pull back to what I call the “point of breakout”. The point of break out is the horizontal price level the market went through in order to break the trend line. As the market came back up to the point of break out we began to look for out volume based entry. Upon reaching this price is was clear to us that the buyers were handing the market to the sellers and letting them take it. We went short and managed to take +20 pips off the first half, with the second half getting closed at break even.
I probably should have closed the second half of this trade for a little profit when I saw it start to bounce off the 200EMA on the 5M but I expected a bit further downside out of this one. If you look at your weekly chart you will see a very large reversal candle off resistance showing the potential for further downside throughout the rest of the week from a technical standpoint. Even though we trade short term I believe it is important to still look at the daily and weekly time frames once a day to get a better overall perspective. This helps when setting final take profits in a big way. You may have gotten into the perfect entry for a swing trade and exit it for only +20 pips when you could have looked at the daily and seen it was setting up for something a bit longer. Even if you strictly day trade the forex market as we do…..do yourself a favor and beware of what is happening on the longer time frame charts! 🙂 I will see you all tomorrow with hopefully another profitable day!
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