#4x currency trading
Big Round Numbers Trading Strategy Scenarios
This article will look at the London open on Friday 21st September and how the EUR/USD was trading around the big round number 1.3000. The price action and order flow dynamics gave a few interesting setups which fit in with my favoured approach towards trading the markets. You can see another article on Forex round numbers here.
Lets s start with a look at the first move into the 1.3000 round number level.
The first chart below shows the EURUSD hit 1.3000 earlier this week and found support. This has given a recent reference point indicating that the market may have order flow in place around the 1.3000 handle. We then zoom out and see that the second chart below shows the EURUSD on a weekly timeframe chart this clearly shows that 1.3000 has been a key level when referencing the bigger picture.
So back to today; price found initial resistance and retraced around 20 pips after hitting 1.3000. Aggressive touch traders may nave seen this as an opportunity to short knowing that price had rallied around 80 pips since yesterdays low and was hitting lower and higher timeframe resistance.
A bearish engulfing candle was formed after the initial hit on the big round number. Price then dropped around 25 pips after moving below the bearish engulfing low (triggering the break); price action traders may have seen this as a confirmed entry to short the EURUSD with a stop loss above the 1.3000 handle and taken profit around 1:1 risk reward, or moved the stop loss to break even after a certain amount of profit was locked in.
The above is of course highly discretionary but the scope was there to potentially adopt either of the above trading strategy approaches. The EUR/USD is the most liquid currency pair available and therefore more suited to this kind of approach than some of the more exotic forex crosses.
With the above in mind many market participants would have been looking for a scenario giving continued downside. At this stage the euro found strength and rallied hard into the big round number.
A simple break above the morning range highs (around London Open) will often result in a high momentum breakout but the setup today had much more going for it.
- A break above the European opening range highs for EUR/USD
- A break above the 1.3000 round number with potential order flow in place following the earlier bounce (potential stop losses and speculative buy orders)
- A break above the trend line as can be seen on the chart below (trend line was omitted from earlier charts for clarity)
This gave a confluence of events hinting that a breakout could possibly be met with additional volatility. And this is exactly what transpired as the breakout took place. This also gives a good example of why traders need to keep an open mind, especially on the intra-day basis when the trend can turn on a dime.
Maybe this post will whet your appetite for looking into this way of forex trading aroundbig round numbers in greater detail. As ever, please note that none of the above constitutes trading advice; this article is intended as market commentary only.
Inside Bar Trading Strategies (Forex-FX-4x.com) This inside bar tutorial covers a classic and often misunderstood trading setup the inside bar. An inside bar/inside candle/inside day (hereafter referred to as inside bar) can be a trend continuation or reversal formation and is defined by a bar that forms completely within the price range of Continue Reading
Inside Day False Breakouts (Forex FX 4X, Trading Strategy Ideas, Price Action) This post will expand on our inside day tutorial with a look at the false breakout strategy. This is something you may want to test yourself and paper trade to see if it complements your existing approach. As ever, this is not a Continue Reading
Harmonic Patterns Harmonic price pattern traders use Fibonacci numbers and geometry to define potential pivot areas. The harmonic patterns allow traders to identify a logical area to put the stop-loss and therefore define the potential risk/reward ratio before entering a position. In this article we will look at some harmonic price pattern examples and how Continue Reading
Enhancing Trading Performance Through Meditation (Forex FX 4X Articles, Trading Mind, Psychology and Discipline) Stress and mental pressures are an every day reality of trading the forex market. Our ability to deal with these challenging emotions can have an impact on our bottom line. How do you deal with losing trades? How do you feel Continue Reading
Forex Fibonacci Confluence (Forex FX 4X, Fibonacci Trading Analysis, Price Action Tutorial) Before we look at Fibonacci confluence we will discuss basic Fibonacci levels and how these are typically used. Forex/FX currency pairs often travel in rhythmic patterns. A secular trend is eventually followed by a corrective movement prior to another extended period of rising Continue Reading
Day Trading With Price Action And Multiple Timeframe Analysis It is not uncommon to see people new to the business of trading try to utilise 5 minute charts and experience numerous losses in the process of doing so. This is not to say that trading higher timeframe charts is a simple path to success Continue Reading
Live Economic Calendar powered by Investing.com, the leading financial portal.
Forex Currency Correlations Forex currency correlation article.
What Is Stop Loss Hunting This post looks at the phenomenon called “stop hunting”. Does it exist?
Fibonacci Confluence Trading What happens when multiple Fibonacci levels are aligned, we have Fibonacci confluence.
The COT Report A key report from the CFTC.
Forex Trading Harmonic Patterns Harmonic patterns are covered in this article.
Currency Correlation Breakout Trading Another look at currency correlations and cross market analysis.
Ichimoku Cloud This post discusses the Ichimoku Kinko Hyo/Ichimoku Cloud charting style from Japan.
Inside Bar False Breakout Strategy Sometimes the initial breakout of an inside day is not the real deal.
Range Trading Breakout Strategy Range trading breakouts are very popular with technical traders.
Top Down Multi-Timeframe Analysis Example Top Down Multi-Timeframe Analysis
Trading Psychology Predicated On Profitable Methodology
Enhancing Trader Performance Through Meditation Ths article looks at how meditation may be of use to traders.
Forex Round Numbers This post looks at psychological round number levels.