Forex Trends Starting to Reverse
When many experts in the financial markets analyst each of the different asset classes, some common themes start to emerge. One of these themes is the fact that forex markets tend to trend 70% of the time. This is important information for those that are truly looking for ways to capitalize on currency movements and to generate sustainable gains over the longer term. But there will always be instances where those trends start to reverse, and this usually comes when momentum starts to slow and the market as a whole reaches an exhaustion point.
To some, these events might seem to make trading difficult. But this is only true of you are willing to follow one strategy, in this case it would be a trend following strategy. Of course, there are other strategies that can be used here as well, so it always makes sense to have a few different tools are your strategic disposal when you are looking to implemented a trading stance in the forex markets. Specifically, this means implementing some sort of contrarian strategy where forex traders are typically looking for places to buy low and sell high. There are significant profits that can be captured when using this method and one of the best currency pairs for implementing such a position this week can be found in the EUR/USD.
Chart Perspective: EUR/USD
Here, we can see that the EUR/USD has overcome the closely watched 1.10 level and is now midway to its next resistance point at 1.1480. But we are likely to see some very large sell orders in this pair once we start to approach the next major line in the sand at 1.15. These orders will likely come from hedge funds and institutional names that are looking to protect options barriers. With this in mind, it might make the most sense to side with the majority momentum that will likely be present in the market and sell into 1.15 as it comes near in the EUR/USD.
In cases like this, it is also a good idea to monitor forex copy trading sites, which can help traders to better assess where the true momentum lies in the market. This can be extremely helpful when looking to construct specific trades in currency pairs like the EUR/USD given its new proximity to reversal barriers against the US Dollar. Fundamental factors like the potential Greek exit from the European Monetary Union (EMU) will also need to be considered but at this stage it looks very likely that technical reversals will be in play.
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