EURUSD Volatility Low For Day Trading but Swing Trading Opportunities Abound
The EURUSD remains mired in low volatility, typically moving less than 50 pips over the course of an entire 24-hour period. For day trading this means that even trading during the London or US session can leave them hunting for price swings that move 5 to 10 pips before pulling back. A nice move is 20 pips. Compare that 2015 when the price was moving close to 150 pips per day, it was a lot easier to jump in for 20, 30, or 40 pip moves.
Despite the lower volatility for day trading, there are loads of swing trading opportunities occurring every day in the forex market. Using an hourly chart, these trades typically last a day to a week. Using a 4-hour or daily chart, they can last a few days to a few weeks or more. In other words, no matter what the time frame, there are opportunities.
Even if looking to specifically day trade, there are still opportunities out there, but they may require looking for bigger moves on a zoomed out timeframe (will explain this later on).
So let’s go through some of the options for forex traders. First, we’ll look at the swing trading option, and then we’ll look at some alternate day trading methods.
Forex Swing Trading Opportunities
In my free Facebook swing trading group people are regularly posting forex trades on hourly, 4-hour, and daily time frames. There are usually multiple favorable reward:risk setups each day, providing an opportunity to potentially pocket some cash each day, especially if using a 1-hour chart.
There a lot of pairs to swing trade. Here’s a list of ones to consider.
If new to forex trading, start with the first column. As you become more comfortable with different pip values you can add in the second column, and then as you get more used to different pip values, spreads, and varying daily movements you can add in the third column. This is by no means even a definitive list. For example, you could add in EUR/CNH, or some of the other lesser-known currencies.
For ideas on how to navigate all these pairs, see the video Pairs to Trade and Setting Up Charts.
If you use TradingView, you can also monitor all your pairs by setting up Watchlists. See all the instructions on the VantagePointTrading Facebook page.
One thing to note is that I have included a couple of Hong Kong dollar (HKD) pairs in the third column. The HKD is pegged to the USD. So the EUR/HKD will move the same as the EUR/USD, but I have included it as there are sometimes slight differences and also the rollover rates are different, so a trade in one pair might be slightly superior to the other pair based on which direction you are going. HKD/JPY will move the same as USD/JPY, but again different rollover rates.
Here’s an example of an idea posted earlier in the EURCAD. “EURCAD heading into an interesting spot. May trickle off and present a long. If it keeps selling off, may be a short on the next pullback higher.”
This is not a trade signal. It is simply an alert to see IF this pair will give a trade signal based on one of our forex strategies.
This is a daily chart. Signals on the daily chart don’t occur as often as on the 4-hour or hourly charts.
With all those pairs and three different time frames, there are multiple opportunities where we get consolidation breakouts near important support or resistance areas which provide us with favorable reward:risk trades.
Forex Day Trading Opportunities
There are days when the EURUSD is great for day trading. There are nice trends and several good reward:risk trades. Other days the action is quite muted.
A little tip is to always have your chart set to the same y-axis amount. For example, you could set it to 70 pips, or 100 pips. It doesn’t matter, just have the same amount. That way you can see how the price is moving each day on the same scale. One of the problems with MetaTrader 4 (if you use that platform) is that every day it will resize the y-axis to accommodate the price action for that day. So even if the pair has only moved 10 pips all day, that 10 pips will take up the whole screen giving the visual appearance of activity…but really there is almost no movement. By always starting with your standard y-axis amount—AND ONLY EXPANDING IT IF THE PRICE IS MOVING MORE THAN YOUR Y-AXIS AMOUNT—you’ll get an objective view of how the price is moving.
That little tip may help you see the days that are worth trading, and which days aren’t (or measure the price swings and avoid trading when the price swings aren’t big enough to offer a favorable reward:risk).
You can also look for bigger moves…patterns that play out in whatever session you are trading that attempt to capture the whole session’s range. There is the “daily range strategy,” or you can look for other patterns.
For example, I noticed that since October if the US session has a big move in one direction, the price tends to follow suit in the same direction during the next US session. Not all the time, quite often. While this is a short-term phenomenon and didn’t work well prior to October, it has been absolutely crushing it the last couple of months. When I see patterns play out repeatedly, I will trade them until they stop working. We will see how long it lasts. In the meantime, it has been an amazing day trading strategy for capturing huge moves in the EURUSD while not having to hold a position overnight.
Whether conditions are great in the EURUSD for day trading or not, there are always loads of swing trading opportunities across various pairs, and if you open to your eyes to bigger patterns, you may notice other day trading strategies as well.