The Euro - a Trading Opportunity Update and Another
We looked at the euro yesterday from both a bullish and bearish standpoint and here we will look at it again and what the recent breakout tells us and look at another trading opportunity.
We never got a signal to the downside instead the euro hit new highs and we went with the breakout.
However the breakout looks unconvincing so when in doubt get out.
While the euro did breakout this trade is now at point of entry and we would scratch it
Why?
Quite simply the stochastic momentum is not supporting the move and is crossing with bearish divergence and another factor is coming into play.
The US stock market looks strong and this could provide support to the dollar.
We can't see the odds clearly so would take the view that the best place is the sidelines and scratch the long trade at breakeven.
On any breakout you really want to the short term price momentum on your side and its not.
So the sidelines look preferable.
We wouldn't want to take a short trade as we have just made a new high on the daily charts.
British Pound
This looks a trade unlike the euro that shows clear signs of turning bearish.
Check out the price action which has seen the pound get within striking distance of new highs.
Price momentum is now turning bearish the RSI Has peaked and the stochastic momentum is weakening, but has not yet turned bearish.
Look for a cross of the stochastic lines to the downside with bearish divergence to indicate near term price momentum has peaked for the bears to take control - Target is the middle of the Bollinger band.
Out of the two trades above the British Pound looks the one to look at whereas the euro is not giving a clear indication of direction.
Protecting equity and keeping the odds in your favour
One of the traits to have when you're are a trader is to be prepared to change view quickly if the right set up does not continue and trade the best risk rewards and this is what we are doing.
Were leaving the dust to settle on the euro and looking at a better risk reward trade in the British pound.
Keep in mind that in the pound the bears do not take control until we have confirmation of bearish divergence on the stochastic.
Related Tags: forex trading, forex trading strategy, forex trading method, the euro, trading opportunity
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