Where is EUR/USD headed?

[PristineTrading]

Over the several months the EUR/USD has been in a strong stage 4 downtrend. Hopefully you have been able to profit from this move lower. Recently things have become more interesting but that may not be blatantly obvious at first glance.

Let's first take a look at the daily chart below.

As you can see, the downtrend has been very strong and lucrative if you have been following the trend. That said, the way things are shaping up now would appear as though another drop is imminent. Before we start thinking to back up the truck and load up short we must first consider the larger timeframe.

To do this we will take a look at the weekly chart below.

As we look at the weekly chart above we see that EUR/USD is approaching a significant support level. This will decrease the odds of any short trade being long lived. We are more likely to see price chop around in this area and either retrace or go sideways.

Now, just because we are at support does not mean we want to jump in long either. We need to wait for a transition to occur before looking long but the potential is there, in the short term.

Looking farther out, if EUR/USD cannot hold this level, there is a lot of additional room to the downside.

It will be interesting to see how this all plays out but make sure you do not find yourself trading against the trend.

If you have any questions feel free to email me, [email protected]

Trade Well!


Pristine Capital Holdings, Inc.

 

[marketshark]

I think it could go to 1.15 or possibly even to 1, if the euro zone doesn't recover and the US keeps improving. That could be a year from now though. In the short term I definitely see it hitting 1.25 soon.

 

[Sigma-D]

Kurt, how will you specifically trade these levels? The levels you refer to on the weekly chart already appear to have been broken, so are you currently short? If not, what will have to happen for you to take another short position?

And if I've got that wrong and the weekly chart support is still holding, what exactly will be the form of this transition you mention? How will you recognise it and how will you trade it long, from what levels etc?

 

[fxmade2trade]

what exactly are your calls? and what are you holding? SHORT?

 

[PristineTrading]

Kurt, how will you specifically trade these levels? The levels you refer to on the weekly chart already appear to have been broken, so are you currently short? If not, what will have to happen for you to take another short position?

And if I've got that wrong and the weekly chart support is still holding, what exactly will be the form of this transition you mention? How will you recognise it and how will you trade it long, from what levels etc?

Hi, You are correct, the first level marked has been broken. This is what makes it likely that we will see a test of the 1.2000 level. I am not currently short however I continue to look to play each retracement, as long as it fits into my plan, short.

As far as the transition; I teach our Forex Course where we go into great detail about this topic. That said, what I will mainly be looking for is a break above Major Resistance. It is hard to say where that level will be since Major Resistance is constantly changing as the chart evolves. At this point the key resistance area to be aware of is around 1.2850

 

[PristineTrading]

what exactly are your calls? and what are you holding? SHORT?

No open short positions at this time on EUR/USD. The article was written to help traders understand multiple timeframes and some of the concepts that truly matter to the chart. So often traders are taught that they need to use this subjective indicator or that one in order to be successful. If you do use them it should be secondary to price. Bottom line is that if you understand price nothing else is needed.

 

[ABTrading]

No open short positions at this time on EUR/USD. The article was written to help traders understand multiple timeframes and some of the concepts that truly matter to the chart. So often traders are taught that they need to use this subjective indicator or that one in order to be successful. If you do use them it should be secondary to price. Bottom line is that if you understand price nothing else is needed.

During my 25+ years of learning and trading the markets, I studied and programmed most every popular indicator. I programmed them so I would fully understand what they were doing. I now can look at a chart and tell you what most any indicator would look like. But I also realized that all indicators do is take the detail out of the price chart and lag behind the price action. The common mistake people make is to think that price follows the indicator rather than the indicator is following the price action. I made a complete circle and all my trading is based on price action, I don't use any indicators in my trading decisions.

 

[Forexmospherian]

During my 25+ years of learning and trading the markets, I studied and programmed most every popular indicator. I programmed them so I would fully understand what they were doing. I now can look at a chart and tell you what most any indicator would look like. But I also realized that all indicators do is take the detail out of the price chart and lag behind the price action. The common mistake people make is to think that price follows the indicator rather than the indicator is following the price action. I made a complete circle and all my trading is based on price action, I don't use any indicators in my trading decisions.

Hi AB Trading

I appreciate you have had more time in the market - I am only 13 yrs and 7 yrs full time on FX trading

However - for me - Price Action in isolation is simply not enough - OK it can work - but even then unless you are always using a 5 second tick chart - PA on a 15 min - 30 min 1 hr even 4 hr chart is lagging

I have found price structure of the session can be as important

This can be assisted my certain indicators - as for me naked trading is just not as accurate as trading with linear regressions / trendlines and also time.

I am a short term intraday trader and so a trade of say 16 pips is a RR of 3+ - I need accuracy and I would therefore not just depend on PA on its own

Only my opinion

Regards


F

 

[ABTrading]

Hi AB Trading

I appreciate you have had more time in the market - I am only 13 yrs and 7 yrs full time on FX trading

However - for me - Price Action in isolation is simply not enough - OK it can work - but even then unless you are always using a 5 second tick chart - PA on a 15 min - 30 min 1 hr even 4 hr chart is lagging

I have found price structure of the session can be as important

This can be assisted my certain indicators - as for me naked trading is just not as accurate as trading with linear regressions / trendlines and also time.

I am a short term intraday trader and so a trade of say 16 pips is a RR of 3+ - I need accuracy and I would therefore not just depend on PA on its own

Only my opinion

Regards


F

I was just giving an explanation of how my journey through the markets has taken me back to price, I by no means am saying that people shouldn't use indicators or anything else that assists them in their trading. I learned long ago that everyone sees the markets differently, you may not see what I see at all in the market, that is why there is always someone for the other side of our trades. Indicators also give confirmation to help some people pull the trigger. So whatever anyone does that assists them in their trading is good!