EUR/USD: Weekly Technical Outlook; Buy on Pullback to 1.4050

I am going to stand aside for now and wait for a pullback to 1.4050 before going long. I have got many questions asking how I determine overall direction. I use moving averages (21 EMA, 50SMA, 200 SMA) and where there are pointing on "the clock" on the daily chart to determine whether price is in a downtrend, uptrend, or trending. If you look at the daily chart I attached to this post, you will notice that I drew the numbers 1-6 as they would be on a clock. When the 21 EMA(yellow) and 50 SMA(blue) are pointing to the 1:00 - 2:00 area of "the clock" price is in a uptrend. If trend lines were pointing at 3:00 region of "the clock" I would determine that price is in a range. If trend lines were pointing 5:00 - 6:00 area of "the clock" price is in a downtrend. And notice how the 21 EMA is above the 50 SMA, which is above the 200 SMA; this is also an indication that price is in a uptrend. As a result of these indications, and the fact that EU broke through a lot of technical resistance last week, I am bullish EU and have determined that EU is in a uptrend. This means I am looking only to take long positions. I do consider counter trend trades when I see bearish divergences forming on upper time frames and stochastics are overbought/oversold on all time frames, but this is rare.

Weekly Strategy: Buy on dips with overall target at the 138.2 FIB extension level @ 1.4290

EUR/USD: +30 pips last trade

I went long at 1.4019 and exited at 1.4050. I am going to stand aside for now and wait for the 1.4050/60 area to be tested as support. Stochastics on H4 and M30 charts are in overbought territory and there are bearish divergences (price making higher highs, OSMA failing to make higher highs) developing on both M30 and H4. If the 1.4050 area holds as support I will take another long position and my target will be 1.4290 which is the 138.2 FIB extension level.

EUR/USD: Why wait for the retest?

The EU broke the 1.3980 level finally after several attempts throughout the day. Does this mean you jump in so you don't MISS THE MOVE? Absolutely not! 70% of breakouts fail so it is critical to wait for a level that is broken to hold as support. Notice the M30 chart where price breaks that level and gains strong momentum as this level is violated. The reason this happens is because some people are looking to buy there but many short sellers have their stops just above that level. Waiting for the retest is giving you a level of insurance and helps improve you risk reward ratio.

EUR/USD: last trade -2 pips: Will EU break 1.4000?

The EU tried to break the 200 SMA M30 several times without success. This is why waiting for the retest is critical. If you would have jumped in on those breaks without waiting on the retest you would have felt a lot of pain several times. I am waiting for the 1.3980 level to be broken and retested before going long. If that 0.0 Fib level is broke and RETESTED my initial target will be 1.4055 which is a few pips below the 161.8% retracement level. I will be looking to go short if we get a break and retest of the 1.3880 area.

EUR/USD: Long @ 1.3964

EUR/USD: EU gets a boost from better than expected economic data

The EU got a boost after German unemployment change data came out better than expected. In addition, core durable good orders and unemployment claims data out of the U.S. came out better than expected. The EU rally was halted when U.S. new home sales data disappointed the market. I am waiting to see if the 21 EMA H4 (purple dashed line on M30 chart) holds as support. If it does i will maintain my bullish bias and will look to go long.

EUR/USD: Closed 1.3925 +35 pips

I closed this trade after housing data came out. I am going to stand aside for now. I just recently increased my position sizes so I am adjusting to that. I add to my position sizes as my account balance allots for it.

EUR/USD: Long @ 1.3890

I waited for the retest this time. I will move my stop up below the 200 SMA (red) once it is broken. I moved my stop to break even shortly after the 21 EMA (yellow) was broken and retested.

EUR/USD: WAIT FOR RETEST!!!!!!!

The market was tough today. My trade today was a prime example of why it is critical to wait for the retest. I got impulsive and was enticed by the spike around 8:00 AM this morning that blew through the 21 EMA on the H4. That is a significant level that hasn't been broken since the 18th. Shortly after taking the trade price bounced right off daily S1 and went right up and broke back through the 21 EMA and daily PP and took me out quickly. If I would have waited for the retest I would have still went short but not until the 21 EMA was broken and retested after this reversal. I break this rule much less often now, but it is a rule that I should follow 100% of the time. I will be looking to short EU as long as price remains below 21 EMA H4. Right now price is meeting resistance at the weekly PP (1.3822). Stochastics on H4 and M30 are in oversold territory right now so EU may be due for a pullback before declining further.

EUR/USD: Stopped -40 pips

EUR/USD: Short EU @ 1.3927

I started feeling some pain on this trade almost immediately after taking it. If I get stopped out, I will examine what I did wrong later. Headed to the office.

EUR/USD: Possible short opportunity

I will be looking to go short if the 21 EMA on H4 is broken and retested. If and when this happens, I will pay attention to how price is behaving around Fib retracement levels on daily chart. As these levels are broken I will bring my stop down 20 pips above them.

EUR/USD: closed last trade +48 pips

I decided to close out the last trade because price found a great deal of resistance at the 1.4015 level. I have decided to wait for price to break and retest the 1.4044 level before taking another position. Stochastics are overbought from Weekly to H4 time frames so we may get another retracement prior to the next bullish continuation. Also, there is a bearish divergence (price making higher high, indicator failing to make higher high) developing in OSMA on daily chart.I am sort of struggling with this decision because I have failed to let the last several trades go to target.

EUR/USD: Long @ 1.3941

Price retraced from last weeks high to the 61.8% Fib level (1.3855) and to lower trend line depicted in M30 chart. I like to wait for a break of the 21 EMA before entering so I got in at 1.3941. My target will be 1.4170 which is the 50% Fib level depicted on weekly chart.

EUR/USD: Possible trade for the counter trend traders

I am going to stick to my trading plan. For those of you that counter trend trade this may be a nice set up for you. H4 stochastics are turning bearish at the moment. If you are thinking of taking this trade you may want M30 stochastics to finish bull cycle.

EUR/USD: Standing Aside; +25 pips last trade

I am standing aside for right now. I am looking to take another long position. I am waiting for either a break and retest of 0.0 Fib level M30 (1.4049) or a retracement to the 23.6% Fib level depicted on daily to go long. If I get a break and retest of 0.0 Fib level on M30, my target will be the 161.8 extension (1.4143). If price retraces to the 23.6% Fib level daily my target will be 127.0 extension level (1.4225).

EUR/USD: Locked in some profits and moved stop down

I locked in some profit when price reached 1.3960. I moved my stop down to 1.4015 right above 50 SMA (blue) and 21 EMA (yellow).

EUR/USD: How far will the EU retrace?

I built a short position right around the 1.4000 psychological level. I notice the bearish divergences (price made higher high, indicator failed to make higher high) in H4 and daily stochastics. My position size is much smaller than usual because of the rather loose stop, and because this is a counter trend trade. I don’t trade against the trend very often, but I got numerous reasons technically to enter this trade. I am exiting this trade at 1.3920. I will move my stop down to first short entry at 1.3975 if and when price reaches 1.3940 area. Price may find support at the 23.6 retracement level (1.3905) depicted on daily chart and then resume the bullish continuation. If this area proves to be support the I will enter long here. If not, I will wait for price to retrace to the 38.2 retracement level depicted on daily and watch if price finds support here to enter long.

My commentary will resume Tuesday May 25

I will be on vacation until Tuesday May 25.

EUR/USD: Standing Aside

30 minute chart: I will look to go short if i get a break and retest of 21 EMA (yellow).

4 hour chart: Price met resistance at 61.8% retracement level and stochastics seem to be headed down. I don't like to short unless stochastics crosses below 80. With a break and retest of 21 EMA on 30 minute chart that should happen. If I take this trade I will post with target.

EUR/USD: Short @1.3490

I decided to short here. I noticed the bearish divergences (price making higher high indicator failing to make higher high) in the OSMA and stochastics. Initial Target 1.3445. I will then sell half my position and move stop to break even.

EUR/USD: Standing Aside

I got out before target on last trade and it cost me 10 pips. I became fearful of a reversal when I noticed the bullish divergence (price made new low, stochastics failed to make new low) developing in stochastics M30 (see chart). Since I broke one of my rules I did visit the accountability terminal located on this blog. Price did reverse back to 1.3488 only to go right to my target. I am standing aside for now. I want to see a break and retest of the 1.3436 level (white horizontal line depicted on chart) before i go short again. I would also like to see stochastics finish bull cycle on H4 and M30.

EUR/USD: Closed 1.3455 +30 pips

EUR/USD: Short @ 1.3485 target 1.3445

EUR/USD: Weekly Technical Outlook

The EU clearly broke the neckline of the head and shoulders pattern discussed in previous posts on Friday. Price is retesting that neckline and should continue to move down if that level holds as resistance. I am looking to short on the retest of the neckline and weekly PP with a target of 1.3445. Quick 40 pips or so. I want to wait and see how price behaves around that 1.3440/30 area since that area acted as such strong resistance previously. A break of that area I will be looking to short again. My overall target on this trade will be that cluster of support depicted on daily chart 1.3340/50 area (50% fib level, 21 and 50 SMA's).

EUR/USD: Ascending channel still intact

Price still seems like it is topping here, but I am maintaining my bullish bias since the ascending channel remained intact this morning. Price retraced to 50% fib level depicted on chart H4. With a break and retest of 0.0 fib level - 1.3720 overall target would be 1.3955 which is the 161.8 fib extension. May go long if price pulls back to 1.3570 area and look to exit at 1.3690. Will wait for break and retest of 0.0 level to initiate another long position. Will be looking to go short with a break and retest of bottom trend line of ascending channel.

EUR/USD: Head and Shoulders

A break of the neckline here would trigger some selling in the Euro. I am still standing aside.

EUR/USD: German preliminary GDP

German preliminary GDP accounts for the value of all goods and services produced by the economy. Important things to note about this indicator:

- Relevance = high
- Germany accounts for large part of Euro-zone
- Number greater than forecast is bullish for EUR/USD
- Most comprehensive measure of economic activity and economy’s condition
- Release Schedule: Quarterly, 45 days after the quarter ends

EUR/USD: Chasing the trade

I was face with a tough decision when I awoke this morning. Price bounced of the double bottom depicted on M30 chart and approached the 21 SMA (yellow). When I noticed I missed the entry I planned on I was disappointed. “What a nice double bottom that is,” I was saying to myself. What concerned me was that price had to breakthrough a great deal of resistance (21, 50, and 200 SMA’s) at that point. Moreover, the risk reward wasn’t nearly as good at that entry point as it would have been off of that double bottom. I then began to ask myself if I should “chase this trade.” Well, I maintained my discipline and decided not to take this trade. Chasing trades has cost me a lot of money and I have learned through experience not to do it. I must admit, it was painful to watch my well planed trade unfold in front of my eyes as I thought about how much my P/L would have increased with that hundred pips. But I’m sure if I got back into the habit of chasing trades it would cost me in the long run. I am watching that 1.3720 area closely. A break and retest of that area I will be looking long. I may consider a short if that area seems to be holding as resistance.

EUR/USD: PPI data

PPI data reflects changes in the prices that manufacturers and wholesalers pay for services during different stages of production. If PPI data indicates inflation, then the American consumer will be paying more for good at the retail level. Important things to not about this indicator:

- Relevance = high
- A small pickup in inflation may be bullish for the dollar because this will push U.S. short-term interest rates higher.
- Release Schedule: 8:30 AM (EST); monthly

EUR/USD: Will ascending channel hold?

I got nervous today after watching that bearish divergence (price making higher high, indicator failing to make higher high) form in H4 stochastics. I locked in 3 pips and moved my stop up. Well, I'm glad I did. Currently, the EU is getting pounded after breaking through the 1.3550 support area. Price is currently approaching weekly PP and trend ling that was acting as resistance since December of 08'. I am watching that cluster of support (weekly PP, trend line, 50% fib level, and bottom trend line of ascending channel) closely. If all of that is broken through and retested I will obviously be looking to go short. If this cluster acts as support, I will take another long position. The daily chart is looking bearish at the moment, as evidenced by possible double top and stochastics just turning below 80.

EUR/USD: Closed +3 pips after moving stop up

I am going to stand aside for right now until I feel more comfortable with things.

EUR/USD: long @ 1.3611

EUR/USD: Standing Aside

EU should meet resistance at 1.3730's which is previous highs in March. I am going to wait for either a break and retest of that horizontal support level or a pullback back to 1.3600 area before going long again.

EUR/USD: Economic Data being released on Wednesday

Retail Sales data reflects how much the American consumer is spending on goods at department stores, auto dealers, gas stations, and food and service providers. Consumer spending accounts for about 70% of the US’s economic activity, and retail sales makes up about one third of that. Important things to note about this indicator:

- Relevance = high
- This report is tricky because a strong consumer reflects that the economy is improving which would increase risk appetite, which has recently hurt the value of the dollar. A really strong number would indicate to the FED that they may need to firm up interest rates (bullish for the dollar). However, since the US has a rather large trade deficit, an increase in the demand of imports increases the value of the currencies used to purchase those products (dollar bearish).
- Due to how tricky this report is it would be prudent to wait for the volatility to decrease before actually taking a position.
- Release Schedule: 8:30 AM (EST); monthly

EUR/USD: closed +75 pips second half of position

I decided to break this trade up because price was approaching horizontal support level and upper trend line of ascending channel. I will wait for a break and retest of that horizontal support, or will wait for stochastics to cool off in upper time frames and for price to find support before taking another long position. May be good short opportunity coming up for you swing traders.

EUR/USD: Afraid to miss a move?

This blog has become a journey of self disclosure. I believe I was inpatient with this trade because I became afraid to miss the move this morning once price made that 38.2% retracement and broke back above 1.3600. Because of this, I rearranged my mental furniture and talked myself into this trade. I neglected to notice that price was at the top of the ascending channel and really didn't consider that stochastics on every time frame from daily - M30 were Overbought at the time. Also, there is a confluence of support (Weekly PP, 21 SMA, Trend line) right around 1.3500 level that I overlooked. What concerns me about this is that confluences of indicators like that tend to act like magnets for price. Now, I maintain my bullish outlook for the EUR/USD but I think I could have had a much better long entry here. I sold half of my position for a 25 pip loss. I plan on adding that back on if price makes it to that confluence of indicators and they support price.

EUR/USD: Economic Data being released on Tuesday

Trade Balance reflects the difference between exports out of U.S, and imports into America. Important things to note about this economic indicator:

- Relevance = medium to high
- Chief element of the US’s Balance of Payment, which provides insight into the value of the dollar
- Imports > Exports = Trade Deficit, which weighs down value of the dollar
- Used as a tool by currency traders to forecast trends of major currency pairs
- Release Schedule: 8:30 AM (EST); monthly

EUR/USD: Long @ 1.3606

I wanted more of a pullback (at least to lower trendline) but didn't get it. Price found support spot on the 38.2% retracement. My final target is the 138.2% extension at 1.3770.

EUR/USD: New Uptrend in Place?

The EUR/USD gained bullish momentum last week after the Non Farm Payroll data came out better than expected. The Eu broke through some significant technical levels, specifically the trend line that has been acting as resistance since the EU hit all time highs in July of 08'. I expect this trend line to be retested earlier in the week and will be looking to take a long position if it proves to now be support. Short term/swing traders may have good short opportunities earlier in the week.

EUR/USD: Economic Data being released Monday

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Fed Chairman Ben Bernanke Speaks on Monday. Forex traders tend to pay close attention to the language in his speeches because they can provide good insight into the FOMC monetary policy goals. Important things to note about Fed Chairman Speeches:

- Relevance = high
- volatility increases during the speech
- may be prudent not to open any new positions during the speech, and to tighten stops during speeches

French industrial production keeps track of changes in the production of goods, not including energy or food. Important things to note about this economic indicator:

- Relevance = medium to low
- Can forecast changes in employment, earnings, and personal income
- Considered a dependable forward looking indicator of the overall health of the French economy
- Release Schedule: Usually 6:40 (GMT); monthly, in the first half of the month, with a two month lag

EUR/USD: +59 pips last trade

The long trade I was waiting for played out, but I got in late. I was waiting for price to retest the 1.3450/40 level. I think I was a little conservative here. I should have went long at 1.3469 area. I went long at 1.3516 and exited @1.3575.

EUR/USD: Waiting For Pullback

I am going to wait for a retest of the 1.3440/30 level before going long. I will need price to pullback to this level to get a decent risk reward ratio (I like at least 2:1). If I don't get the pullback today, I will wait for the trend line on daily to be broken and retested before going long.

EUR/USD: Waiting for break of range

I am waiting for a break and retest of the range ( 1.3244 - 1.3432) before I get back in.

EUR/USD: Non Farm Payroll

As a refresher for myself, and to help other traders, I will be providing daily brief explanations of the Economic Data Reports that effect the EUR/USD to be released the following day.

The Non Farm Payroll Report (NFP), also referred to as the establishment survey, is coming out tomorrow and this is the "big number" all traders really pay attention to. The NFP forecast is for the U.S. to lose another -590K jobs. Important things to consider about this report are:

- Relevance = High

- NFP reports on about 80% of U.S. workforce, except government jobs, self employed, and farm workers, among some others.

- most economists believe that the U.S. needs to add an average of 100,000 to 150,000 jobs every month to accommodate population growth and to keep unemployment rate from rising

- the markets pays close attention to the difference between the actual number and the forecasted number

- trading this report is very difficult and risky

Closed Last Trade for +33 Pips

I locked some profits in earlier in the day after I noticed the bearish divergences on the 30 minute and 4 hour charts. I need catch up on the fundamentals and technicals before I take another trade. As I just glanced at the charts I noticed things looked pretty bearish.

EUR/USD: Hammer H4; 50% Retracement from yesterdays high

It is never easy is it. I am a little concerned about this trade due to the bearish divergences (Price making higher high, while indicators failing to make higher high) in OSMA's on the 4 hour and 30 minute charts. We did get a bullish candle formation on the 4 hour chart in the form of the hammer bottom. Price pulled back to 1.3320 which corresponds almost exactly with a 50% retracement from yesterday's high. With a break and retest of 0.0 Fib level (3o minute chart)at 1.3437 the projected price extension level would be the 161.8 Fib extension at 1.3576.

EUR/USD: Re-entered Long @ 1.3340

I was whipsawed out of my earlier trade for a 40 pip loss after the German Retail Sales m/m numbers were released earlier this morning. I re-entered after price broke above 1.3300 for the second time after Pending Home Sales came out better than expected at 3.2%. I find it hard to re-enter trades after a loss but the technicals and the fundamentals matched so I got back in. When the markets risk appetite increases the dollar starts getting sold because it is considered a "safe haven." I'm confused. If better than expected news is coming out about the U.S economy and the European economy is continuing to get worse, shouldn't the dollars value be improving against the Euro? I don't know, I just follow the crowd. My target is the 138.2 extension of the Fib depicted on the chart since price seemed to bounce off the 38.2 retracement level. For those of you that are not familial with MT4, the green dashed line is where I entered the trade andf the red dashed line is where I currently have my stop.