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

There are lessons on: Fibonacci Made Easy, Support/Resistance, Pivot Points, Moving Averages, the Alligator and Money Management

There are videos of: Using Fibonacci, Using the Alligator, Using Pivots, and Trade Analysis

Also check out my review of the best forex educational service I’ve ever experienced: Forex Education| fxKnight.com Review

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

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

Now we have an even bigger enemy to U.S. retail forex: President Obama. With the recent passage of the Dodd-Frank Wall Street Reform Act, many traders will be very upset to know that Section 742(c) of the Act states as follows:

“…A person [which includes companies] shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency [emphasis added] except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe…”

In other words, this provision will not come into effect UNTIL the CFTC or another eligible federal body issues guidelines relating to the regulation of foreign currency within 90 days of its enactment. The Dodd-Frank Wall Street Reform Act was officially enacted on July 21st, so in other words expect the CFTC to announce their newest proposal or decision within in the next 90 days, or round about October 19th. That’s my take on the issue, but I’m curious as to what others have to say.

At this point it’s almost a non-issue due to the fact that almost all major U. S. retail brokers have now moved their offices off-shore to prepare for the initial proposal from the CFTC earlier in the year.

CFCT Makes Final Ruling on Leverage

Well it came sooner rather than later, but the final decision has been made as to how the new U.S. Retail forex market will be regulated by the CFTC and current government legislation. Final Decision: 50:1 for all major currencies, and 20;1 for the rest. As I’ve stated in both my articles, this will be the end of U.S. retail forex. It’s been swell!

For a great summary of the final ruling, please visit: www.forexlive.com

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.

Here’s what my fellow trader Andrei Knight (Sr. Currency Strategist for fxKnight.com) is saying:

I’m expecting we’ll do a bit better than last month’s -125K, but perhaps not quite enough for a positive number.  The important thing to listen for, however, remains the sector-by-sector breakdown, and not the headline number.  We need gains in areas besides government and healthcare, and permanent jobs rather than temp ones.  Otherwise there is no long-term recovery possible.  I’m not as optimistic about the unemployment percentage, however – we may well hold steady or even slightly worsen there.

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!