FOREX-NATION » Technical Analysis

Fibonacci Level 38.2 Continues to Support EUR/USD

Moderator — Tue, 07 Dec 2010 18:30:33 +0000

We are seeing the EUR/USD continue to consolidate in the 1.3400/1.3250 range. I continue to watch for a sustained break of 1.3270 where the 38.2 fib. level held price action up yesterday and again so far today as well. In the chart below we see both the 38.2 fib level, 200 MA and daily S1 have acted as support for the past two days. I think we can call the 1.3250/60′s a decent support level to watch! By the way, my fib level was drawn on the hourly chart from 1.3767 to 1.2968.

Not too much fundamental data to drive either currency for today or tomorrow, but look at the economic calendar for Thursday as we have some moderate economic reports that could be the kick in the pants this currency pair needs in order to see some decent trending price action. I’m looking to place small orders at the range borders I described above with fairly tight stops (40 pips). Good luck trading!

Also check out: Fibonacci Made Easy

A Look at the EUR/USD Chart

Moderator — Mon, 06 Dec 2010 18:14:27 +0000

Well it was an abysmal employment report last week but that didn’t mean risk off for the eur/usd as the market jumped to life after a brief risk aversion reaction to the unexpectedly low figure. That said the market closed Friday with some minor profit taking and consolidating going into the weekend.

Looking ahead it would appear that markets are still consolidating and has found decent support for the time being at the 200 MA and just above the Daily S1. My initial analysis is that the euro/usd will continue to climb back up the price ladder, but the only puzzling factor here is the crossover on our alligator which gives me a conflicting signal. So no trading for the day today as I wait for a definitive direction to iron itself out. Again my guess is for a continuation of the uptrend which started last week after price action reached the weekly S1 as well as a crucial fib level ( see Fibonacci Trading| 38.2 Retracement Reaches 138.2 Extension) but I remain on the sidelines until I get further confirmation signals.

Also here’s a quick snapshot of one of my charts to show you more of what I just mentioned.

Fibonacci Trading| 38.2 Retracement Reaches 138.2 Extension

Moderator — Tue, 30 Nov 2010 18:16:03 +0000

I want to show you my latest example of Fibonacci retracement and extension levels working together to produce profitable trade opportunities. You will also see in the image below that the fib. levels agreed with my other indicators in confirming the direction of the trend. Both the 200 MA and the weekly pivots provided me with entry opportunities for a great longterm trade setup as well as allowed me to justify staying in the market even after the target of 138.2 was hit earlier this morning. This one trade has already netted me over 750 pips. Now that it has reached the weekly S1, I’m cautiously watching to see if this critical level in price action will spur a new rally, or if price action will break below there and continue further south.

Fib Reaches 38.2 then extends to 138.2

EUR/USD Goes Bullish

Moderator — Wed, 01 Sep 2010 17:37:55 +0000

After a week of boring range trading, the pair rose earlier to 1.2855 where it met the Weekly R1. This was the highest price since August 19. Despite the pull back after we hit the Weekly R1, the Euro is still trading more than a 120 pips above today’s opening price, the biggest daily gain in almost a month. Looking ahead, I would expect to see the current rally extend as high as 1.2900′s. Also watch for 1.2780 as an important level of support; it is both the old trend high for the recent rebound as well as the 38.2% retracement of today’s 1.2663/1.2855 range.

Here’s my 4 hr chart. Good luck trading!

EUR/USD vs. Daily Pivots

Moderator — Thu, 26 Aug 2010 21:54:38 +0000

Well it looks like my bias for more of a down move on the EUR/USD below the 1.2600 level has not come into being just yet. The pair is still continuing to consolidate and shake out the longer-term short trades (mine included) as it inches is way above the 1.2700 level. Lots of resistance to be had up above, but since we are at the end of the week, I’m taking the next day off while this currency pair makes up its mind with regards to the next trend.

Anytime you are in a ranging market, daily pivot points work quite well at predicting price action. As I mentioned in my post below, I have been looking for opportunities to short this pair all week, so I wanted to share how well the daily R1 worked for me at picking price levels at which to enter the market. On Tuesday the weekly S1 and daily S1 combined to give me a decent buy level, but I also waited for it to also reach the daily R1 at which time I closed that position and entered a new short position. Being adaptable is the new of the game. Here’s a pick. Post questions below!

For more about using Pivot Points, check out this brief lesson: Pivot Points

Quick look at the EUR/USD 4 hr chart

Moderator — Tue, 24 Aug 2010 18:52:33 +0000

UPDATE: 8-25-2010

I am still short on the EUR/USD as it still appears to be a bearish trending market as of this writing. Here are two more pics of my graphs. This first pic shows that a bearish engulphing candlestick has formed on the 4 hr chart and our moving averages are still far enough apart to indicate the bearish momentum is still decent.

Also lets see what forms of support might account for this period of consolidation that we are in. The answer is once again a fib level my friends. Here’s my daily chart where you will see that we are right around the 50 fib level from the recent May to August rally.

So I would watch today’s price action real close to see if the current 1.2720/1.2600 range is broken and use that to predict the next direction of this pair. If we can close above 1.2690/1.2700 at the end of the NY session, then I’d say we might see a reversal of the trend, but if not I would say we are headed lower, perhaps the lower 1.2400′s right around the 61.8 fib level on the daily chart.

To learn more about these indicators, follow these links: Fibonacci Made Easy, Moving Averages, The Alligator

Easy Trade Set Ups on the EUR/USD

Moderator — Tue, 10 Aug 2010 16:22:57 +0000

I love it when a plan comes together! The trendline that I’ve been posting about and following since the end of June when bullish momentum took charge over the EUR/USD pair, was finally broken today as a result of both profit taking ahead of the U.S. FOMC meeting and and abysmal Q2 Non-Farm Productivity figures (biggest decline since Q3 2008). As a result of that trendline break we saw strong selling pressure that was met with slight support around the 200 MA and weekly S1. The retracement went right up to my red MA (which provides support/resistance in strong trending markets) as well as the 50 fib level. God I love fib levels more and more. Once the retracement was laid to rest we’ve seen price action drop even farther as low as 1.3072 as of this writing. I provided a picture of my chart to show the technicals mentioned above. Hope everyone finds it useful. Feel free to leave me any questions or comments.

NFP Trade Setup for August 2010

Moderator — Fri, 06 Aug 2010 13:50:53 +0000

Well the numbers are in and as expected the unemployment rate held steady at 9.5%. June private sector jobs were revised much lower, to +31,000 from +83,000 previously! Total non-farm payrolls were revised lower to -221,000 in June, from -125,000 previously. All in all this was not a good sign of the times here in the U.S.

I’ve attached a photo of the trade setup that I took on the EUR/USD. Whenever trading the NFP, I always let the market choose a direction first, then wait for a retracement to begin and use my fib levels to determine my actual entry. In this case the momentum was very strong and so our retracement was very weak, only reaching the 23.6 level before taking back off again. This is the 5 min chart, my preferred chart for volatile news event trades.

EUR/USD Ready to Breakout

Moderator — Wed, 28 Jul 2010 18:52:28 +0000

Here’s a simple look at my 4 hr chart where I only have my trendline and fib levels showing. The fact that we have the 61.8 fib level syncing up perfectly with a nice round price level like 1.3000 shows that we are at a critical level (I believe) for the euro. For 9 days in a row now, that 1.3000 price and 61.8 fib level has been tested and yet not broken on the daily chart as well. There is LOTS more resistance levels above than support levels below, leading me to guess that the rally we’ve been riding high on is at a plateau and soon we’ll see a reversal in trend. Above the 1.3000, we have two big forms of resistance: one is the weekly R1 at 1.3050 and the daily R1 at 1.3057. There’s also minor resistance at 1.3035. To the downside, a break of 1.2970 would peek my interest that momentum has shifted, but ultimately we should watch that red trendline to confirm a true reversal has happened.

I’ve been trading the range (which I have at 1.2970/1.3030) on the hourly chart for modest 40 pip T/P with a 20 pip S/L and had 3 successful trades this week doing that, and I will continue to do so until the market breaks out of this counter-trend. Trading ranging markets is brutal sometimes since about 80% of all breakouts become fake-outs, and I like to ensure that I never get emotionally attached to the trade so that if the trade goes against me, I still can re-evaluate and jump back on board in order to not miss out on the next trade setup. If anyone has questions or comments feel free to leave them below. Good luck out there!

EUR/USD Finds Resistance at 61.8 Fib Level

Moderator — Wed, 21 Jul 2010 17:33:09 +0000

Well last week I posted the graphic showing how the 50 fib level provided resistance to the strong rally we were seeing all week and reminded everyone of the powerful tool that fibonacci levels are to trading. Well now the next level up, and one of the most crucial levels to know about, 61.8 has provided a stronger source of resistance by capping any rallies above it three days in a row. We have now seen a sell-off that currently finds support at the 50 fib level (support turned resistance). The pair is now consolidating in a tight range between 1.2790 and 1.2830. Whichever of those two levels is broken first, that’s the next entry setup for you to take advantage of.