TAKE ADVANTAGE OF EURO USING THREE TECHNIQUES
Trading the euro anytime soon? Hold your horses, first. Before you race to trade the common currency, you may want to try the following techniques to maximize the euro.
Buy the Breakout or Sell the Breakdown
The maxim "patience is a virtue" holds true during the consolidation period. Traders needs to make low-risk trade entries in the event support or resistance breaks, paving the way to a firm selloff or surge. It is because the EUR/USD glides to and fro within limited boundaries for longer timeframes, placing trading ranges that will result in new trends.
Traders only need good timing for the simple strategy to become effective. If you enter too early, the range could ignite a reversal. Conversely, if you enter too late, the position will execute either above new support or below new resistance. While we can’t cut timing risk all the time, an initial position may be opened if the currencies breaks out or breaks down.
Buy (or Sell) the Retreat
Countertrend movement is the ultimate friend of this pullback strategy, which determines considerable support or resistance levels that should regain the preliminary direction and end the price swing. Oftentimes, such levels surface at previous peaks or troughs. Fibonacci retracements, the inception point of the initial thrust, and moving averages define these levels as well.
When using this technique, bear in mind the EUR/USD slides in both directions, carrying the price from one level to another in an upbeat feedback loop. Take note, too, the movement tends to fade in case the supply/demand equation changes.
Enter Narrow Range Patterns
Either the EUR/USD will climb or stumble into a substantial barrier and then rest. As a result, the pair records steep price bars which lowers volatility and heightens lethargic levels. Such levels can imply a breakdown or breakout.
Frequently, the setup releases an NR7 print, which is the slimmest of the seven bars. The pattern indicates price levels will emerge in a substantial breakout or breakdown. Since the stop loss can be placed in case of a major reversal, this is considered a low-risk entry.
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