Trading Opportunity - the Euro a Live Example a Trade for Big Profits
The euro against the US dollar is showing a trading set up that could yield some great profits regardless of whether the currency moves up or down.
Let's look at how this currency pair can be traded and how a move either way could make some great profits.
For this example we are using the free charting futuresource.com.
Pull up the daily chart; you will see that we are near critical resistance which the euro is trying to hurdle.
We have two possibilities of course we can either
See a breakout of the highs at 1.3400 or we can see the euro retreat from the highs and stay within the range.
A clear break of the highs would mean that important resistance is broken and the possibility is that stops will be hit and fresh buying could propel the euro much higher.
The other scenario is that resistance holds and the euro falls back.
How do you trade this move?
Watch the near term price momentum.
Resistance RSI & Bollinger bands
For this you need the stochastic indicator and the RSI.
At present the stochastic momentum is weakening and if the lines cross to the downside with bearish divergence, the odds favor the bears.
Target would be the middle of the Bollinger band (the green line) which represents the longer term moving average.
Notice how the RSI has peaked at overbought levels and is trading just off these levels.
At present it looks like the bears will prevail. The bulls will take charge on a clear break above 1.3400 - with stochastic momentum supporting the move.
Wait for confirmation
We favour the bears however don't try and impose your view on the market. Go with the stochastic signal to see if the odds favour the bulls or the bears.
By using the stochastic to give you near term price strength or weakness and using the resistance level you can decide which direction the currency is likely to go in and the odds of success.
Follow Price Action
This is a good trading set up and stop protection is obvious on either a bull break, (below the breakout point) or on a bear break (above resistance) - it's a good set up and easy one to trade.
Remember: Don't impose your view -wait for confirmation fro momentum before trading either way.
Related Tags: currency trading, forex trading, forex, online forex trading, online currency trading, forex tips
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