In my weekend newsletter I laid out some reasons why I am not really on the bear train for the EUR anymore.  Make  no mistake I am with the trend as long as it is there, but I am more so watching for a reversal at this point.

The drop below 1.2330 is a “pivot point” which I am watching.  The drop below provided a quick trade to the downside, but the rise back above it has placed a bullish sign.  This was a significant level back from 2008, and since the forex market likes to overshoot major levels this was what I was watching for to start looking at some upside –  drop below and a rally back above – a bear trap.  It may not be the bottom yet, we shall see, but right now the pair continues to trade above this pivot point.

A fall back below this level once again puts a negative bias back on the Euro, but lows still need to be taken out at 1.2234 before further downside can be seen.

I am not advocating catching a falling knife.  The trade is based on the pairs tendencies and we are basically looking at a break even trade now if the pair pulls back to the pivot point.  Since this level has been moved through a couple times, actual support comes in from 1.2280-1.2250 and then at the lows 1.2234.  A fall below this indicates further downside, yet I will also be looking for quick bear trap trades which may turn into full reversal trades if the pair does in fact reverse after putting in a bottom.

The pair seems a little stalled at 1.2400, with resistance beyond between 1.2415-1.2430 and then 1.2500 – 1.2520, 1.2540 and 1.2575

Cheers,

Cory Mitchell, CMT

~Trading should be done according to a detail plan.  The above analysis is a not a buy or sell recommendation, each trader must make their own trading decisions.  Please see our Legal Disclaimer page so you understand your risks in trading.

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The following is your daily EUR/USD outlook for March 15, 2010.

The downward daily trendline was broken on Friday, setting up for a further move higher in the EUR.  Short-term caution is still warranted due to the high likelihood of false breakouts.    That said, the “saucer” like formation on the daily charts makes a re-test of the lows recently put in a low probability in the near term.  A move above 1.3800 is what needs to be seen next.  With a high number of shorts in the EUR a short squeeze could ensue if the major resistance levels at at 1.3800 and 1.3840 are taken out.

An upside a target is at 1.3870 as well at 1.3890-1.3910.  Beyond this we are looking at a longer term target of 1.4030.

Pullbacks may occur into the 1.3730-1.3700 region.  Additional support comes in at 1.3680 and 1.3620.  A drop back below 1.3680 would indicate the break higher was false and the pair will move lower once again or continue to stay in a more range-bound environment.  A further drop, where that situation to develop, would likely find support at 1.3540, with a drop below 1.3520 indicating a retest of range lows at 1.3430.

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Best Wishes,

Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

Well, I am getting over a cold and rather tired, but after just watching Canada win another two Gold medals my spirits were lifted and so I put together this quick video on the EUR/USD.  It looks at the daily chart, what I am waiting for and why I am not real interested in it until it breaks out.  And of course I look at where a breakout is likely to go and how I trade it.

I want to trade aggressively when a trend presents it self, but I will sit back until the pair shows signs of this once again.

So forgive my cold, here is the video….

Here is the link to the article I mention in the video – http://www.investopedia.com/articles/forex/10/range-trade-without-usd.asp

I see the video got a little blurry when uploaded to youtube, so here is a chart which you can refer to as well. This has the same markings as the chart in the video so you can clearly see the levels being watched.

Cheers,

Cory Mitchell, CMT

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EUR/USD Daily, FreeStockCharts

~Know your risks when trading. Please read the Legal Disclaimer page.

The Calm before the storm…..

Relative to previous sessions, Monday was fairly sedate, holding within about a 70 pip range.  Signals within this range are not high probability.  The swing high is significant at 1.3650-1.3660.  A move above this indicates short-term buying and possible retest of the the next swing high at 1.3780 over the coming days.

The move above 1.3660 would set up a short-term uptrend within a longer term downtrend (which is still in tact and will likely remain for some time).

On the downside support is between 1.3580-1.3570.  A move lower is likely to target 1.3540 followed by 1.3520 and 1.3480 if selling continues through the mentioned levels.  Beyond this are significant lows between 1.3460-1.3440.

While Monday was quiet, a return to more volatile markets is likely not far off but will require a break beyond Monday’s daily range.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

Before Japan even officially opens we have significant selling in the EUR which I suppose nicely caps off another volatile day for currencies.  No significant resistance levels were breached on the EUR rise early Thursday, so breaking back below key support was a major warning signal.

Resistance on the upside comes in at former support, 1.3540, followed by 1.3560 and 1.3600.  Beyond this there is a swing highs at 1.3620 and 1.3650 which will also be resistance.  A rise above these latter points indicates continued short-term strength, but is unlikely.

Primary target for the break below support (which has already occurred) is 1.3400 with some support expected along the way at 1.3440-1.3430.  Beyond this targets are 1.3375, after which the targets become more spread out at 1.3300 and 1.3260.

Currently the pair trades at 1.3480.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

After passing through 1.3640 on Tuesday the EUR was able to reach 1.3700 before extending gains and hitting several profit targets along the way.  Right now the EUR/USD sits at resistance just below 1.3780.  Getting above this has an initial target of 1.3800-1.3810 followed by 1.3840 if the advance continues.   While the longer term downtrend is not in danger right now, a move above 1.3840 indicates a short-term (continued) upward bias for the EUR.  Resistance comes in again between 1.3865-1.3880 followed by 1.3900-1.3920.

Minor support in early trading is at 1.3750-1.3740.  Beyond this 1.3700 is indicated to provide some support as well as 1.3680-1.3670 followed by 1.3640-1.3630.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

Took the day off yesterday because of the holiday, and as expected nothing happened on Monday.

Trend remains down.  Minor resistance sits atop the small range seen Monday, at 1.3640.   A break above is likely to challenge 1.3700.  Not reaching that mark  is bearish for the EUR.   Further resistance is at 1.3730-1.3740, 1.3770-1.3780 and 1.3800.

A drop below support at 1.3580 is likely to target recent lows near 1.3530.  Calculated target is 1.3520.  Little support is beyond this, and there is an overall target of 1.3400 if the decline breaks through recent lows. If this develops, some support is also likely at 1.3500 and 1.3440-1.3430.

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Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

Every night I post an analysis for the EUR/USD.  Yet, it has come to my attention that quite a few visitors are unfamiliar with the forex market.  There is information on this market under the Tutorials heading, but I will provide a basic outline of forex trading here:

The Foreign Exchange market is based on the simultaneous buying of one currency and the selling of another. This means that  a trend either up or down can be traded simply by interpreting which currency will continue to be weaker or stronger relative to the other. Currencies are available for trade 24 hours a day, 5 days a week. Being that the currency market is the largest market in world, with daily volume of over $1.4 trillion being bought and sold, the liquidity and time availability of trading makes it one of the most potentially lucrative markets available to anyone.

When you trade in currencies you are trading in currency pairs (one currency relative to another), thus when you buy a currency pair you are “long” the currency listed first in the pair, and thus expect it to appreciate. If you sell the currency pair you are “short”, and expect the first currency listed to depreciate relative to the second. Since these markets trade 24 hours a day (during the week), profits/losses will fluctuate as the currency values are always moving. Examples of currency pairs include the EUR/USD, USD/JPY and USD/CAD.

All markets have two prices at a given time. These prices are the bid and ask, which reflect the price buyers are willing to buy at and sellers are willing to sell at, respectively. When trading through a Forex broker if you want to buy you will need to purchase at the ask price, and if you want to sell you will need to do so at the bid price. The difference between the bid and ask is called the spread – this is the cost of your trade. Since Forex brokers do not charge commissions, this is how they make their money. For the trader it is imperative to find a broker that offers small spreads, as over time, larger spreads will significantly eat into profits.

Leverage is very common in the FX (forex) market, and this is why it is so popular among traders; large returns can be made from a small investment. FX brokers will commonly give 100:1 and up to 400:1 leverage. This means that for every dollar you receive a minimum of $100 in capital you can trade with. Lets assume that you choose to have 100:1 leverage in your account, and you deposit $1000. You will have $100,000 in total buying power you can make money off of. To open a position worth $10,000 will mean that you put up $100 in margin. This is your good faith assurance of the trade, and as long as you maintain a total of $100 in your account that trade can stay open.

A $10,000 dollar trade is called a mini lot and each pip movement will result in a profit or loss of $1.00 approximately (will be based on what currency pair you are trading). A $1,000 dollar trade is called a super-min lot and each pip movement will reflect a gain or loss of $0.10. A standard lot is $100,000 worth of currency and thus each pip movement is worth $10.00. Currency pairs differ in how much they move on average each day. Some currency pairs frequently see moves of 400+ pips a day where others will almost always be under 100 pip movements.

A pip is the smallest amount a currency moves, or an incremental movement.  Much like a stock may move a “penny” on an incremental move, a forex pair moves a pip.

Brokers will commonly “roll over” positions in your account. This means that each day you will be credited or debited the difference in the interest rates of the currency pairs you are holding. This is not interest on your margin or the leverage your broker has given you. If one country has an interest rate of 4% and another has a 2.5% interest rate, this difference will be credited or debited from your account depending on if you are long or short the higher interest currency, respectively.

If you are interested in trading, or are dissatisfied with your current broker check out Forexyard.

Cory Mitchell, CMT
Know your risks when trading. Please read the Legal Disclaimer page.

Slower day for the EUR/USD on Monday. While the EUR did push above minor resistance at 1.3680 ultimately it has so far failed even to test the recent swing high at 1.3740 and currently trades at 1.3660.

The consolidation pattern which is currently visible on the short term time frames is traditionally a continuation pattern. Considering the strong trend, overall bias remains to the downside.

A drop below 1.3640 is likely to move into the 1.3620 region (this is more so the level to watch), with a drop below that level indicating a test of recent lows just below 1.3600. A break below the recent low has a target of 1.3485 with some support likely at 1.3540 and 1.3500-1.3485.

Resistance comes in at 1.3680 and then at Monday’s high 1.3700-1.3715. Beyond this, 1.3740-1.3750 is resistance. If the EUR can push above that level, there is a possibility that a larger upward correction could be underway. That correction could move the rate up into resistance at 1.3820, followed by 1.3860-1.3880 if the EUR continues to advance.

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

The EUR has fallen off slightly in early trading this week and that movement has established some levels we can watch for entry.

The overall trend remains down.  Bias remains to the downside until the pair moves above 1.3750.  If the EUR can push above that level, there is a possibility that a larger upward correction could be underway.  That correction could move the rate up into resistance at 1.3820, followed by 1.3860-1.3880 if the EUR continues to advance.

Current minor resistance is at 1.3680.  A rise above indicates a test of resistance at 1.3730-1.3740.

Minor support in the early session has developed around 1.3630.  Drop below indicates a retest of recent lows just below 1.3600-1.3585.  A break below the recent low has a target of 1.3485 with support pausing likely around 1.3540 and 1.3500-1.3485

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.