Gonçalo Moreira, CMT
Independent Analyst
- In a 0.0050x1 60-minute Point and Figure chart, and thanks to the descending column developed on the 22nd, we can establish an horizontal count targeting a new low of 1.0300.
- The potential to reach the 1.2100 target was finally eroded and traders are now more confident that serious inroads to the downside can be achieved.
- The EUR/USD has been showing a volatility of plus 16,000 pips since August, as measured in thresholds of 50 pips, an equivalent to a 150% performance path at current rates. Point and Figure charts show this practical measure of volatility very well. The risk in turn, is measured in terms of the height of the range, around 1250 pips.
- Directionally, I remain a EUR/USD bear over the short-term, having closed a big portion of floating longs last week, and positioning new sell limits at 1.1100, 1.1114 and 1.1130. How the equity curve stays can be seen in the below chart.
- Adopting fresh longs will be done around the 1.08 area, specifically at 1.0801 and 1.0797.
The trading methodology reported in this analysis is based on a non-directional approach. It is meant to capture the most amount of pips from the constant price oscillations, either up or down. Each trade has a take profit of 50 pips, a stop loss of 500 pips. The size of each trade is regular, but trades can be stacked around key support and resistance zones, increasing the overall position size around certain price zones. The system can perform either in trending or range bound markets, but it suffers when there is an extreme unidirectional price advance. Buy and sell positions are taken with two separate real accounts.
To learn more about the method, you can watch these special webinar series:
Exploring the Coast Line of Foreign Exchange Land - Part I
Exploring the Coast Line of Foreign Exchange Land - Part II
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD eases to near 1.0700 ahead of German inflation data
EUR/USD is paring gains to near 1.0700 in the European session on Monday. The pair stays supported by a softer US Dollar, courtesy of the USD/JPY sell-off and a risk-friendly market environment. Germany's inflation data is next in focus.
USD/JPY recovers after testing 154.50 on likely Japanese intervention
USD/JPY is recovering ground after sliding to 154.50 on what seemed like a Japanese FX intervention. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Focus shifts to the US employment data and the Fed decision later this week.
Gold price holds steady above $2,335, bulls seem reluctant amid reduced Fed rate cut bets
Gold price (XAU/USD) attracts some buyers near the $2,320 area and turns positive for the third successive day on Monday, albeit the intraday uptick lacks bullish conviction.
Ripple CTO shares take on ETHgate controversy, XRP holders await SEC opposition brief filing
Ripple loses all gains from the past seven days, trading at $0.50 early on Monday. XRP holders have their eyes peeled for the Securities and Exchange Commission filing of opposition brief to Ripple’s motion to strike expert testimony.
Week ahead: FOMC and jobs data in sight
May kicks off with the Federal Open Market Committee meeting and will be one to watch, scheduled to make the airwaves on Wednesday. It’s pretty much a sealed deal for a no-change decision at this week’s meeting.