EURUSD ~ Zones of Support and Resistance Update 10/25/15
Comment:
Instead of going straight to the dry technical stuff. I would like to answer a question. Which I hope is educational.
If nothing else you will get a glimpse into the mind of one trader.
Why did I post a possible trade and make the comment ignoring all news on the last update?
We all look at charts for a reason, we try to find support and resistance levels or use other technical indicators to support our own reason to enter a trade.
Look at all the trade ideas posted. They all draw trend lines at the lowest or highest point of a change in direction ignoring all past news.
It is up to each individual to take that possibility of a trade and do their own research before entering a trade.
When reviewing the ideas, it is all about perspective. If you are a short term trader, then you may be sitting at the stop if not already stopped out.
If you are a position trader, which I have gravitated to over the last few years. I adapt. I see two more entries. The 2nd Zone of Support (1.1013) at minor support. And the 3rd Zone of Support: (1.084 to 1.080).
If we are at resistance at its current price (1.1011) the target would be the 50% Fib Line (1.125). Which is above the first entry point.
If the Euro continues to decline to the 3rd Zone of Support (1.0845) before finding support then the new target would be the 50% Fib Line (1.1169). Which is still above my entry point.
With proper position sizing I could still exit with a profit even if it does not reach that target. As a position trader, I do not exit trades when they fail. Why? because I cannot predict when the market will turn. If I exit on failure I will never get that money back. So I trade small, adapt to the conditions and allow time to work in my favor with a minimum goal of break-even on the first trade.
And yes, I do have an exit strategy.
Opinion:
For some reason this last decline reminded me of the movie Australia with Nicole Kidman. There was a scene when Nicole and Jack were in a canyon during a cattle drive. At the end of the canyon was a cliff. As long as the cattle could be moved with a slow controlled orderly fashion, the cowboys could direct the cattle around the cliff.
Then here comes the bad guys (Drahgi), that throws the lanterns off the cliff causing a stampede. All of the cattle (Traders) are trading on fear and emotion. The first fence (Trend Line) has been broken and we are at the second and third. Will they hold, only time will tell when traders have no defined direction in the markets
If you are a short term trader I recommend you wait until you find which fence (Trend Line) will hold or where the new one will be built.
If you are a position trader, I see buying opportunities for a future reversal as described above.
Technicals
The chart has been corrected to reflect what I see as the current conditions. The pennant and intermediate bullish channel has been deleted.
A bearish channel has been added. The top line was cloned and lowered to another high and the first break down low. This may offer support and is estimated.
The Zones of Support and Resistance has changed as follows.
Zone of Support
1st: Minor Support at 1.013 (The price is currently just below that)
2nd: 1.084 to 1.080
Zone of Resistance
1st: 1.1158 to 1.1085
2nd: 1.136 to 1.139
3rd: 1.147 to 1.149
4th: 1.171
The bullish 6th month trend may offer support.
Emotions are running high and unpredictable. So trade safe.
Conclusion
The 'Most Interesting Man in the World' says “Stay Thirsty My Friends”.
I say, “Trade Small My Friends”.
Instead of going straight to the dry technical stuff. I would like to answer a question. Which I hope is educational.
If nothing else you will get a glimpse into the mind of one trader.
Why did I post a possible trade and make the comment ignoring all news on the last update?
We all look at charts for a reason, we try to find support and resistance levels or use other technical indicators to support our own reason to enter a trade.
Look at all the trade ideas posted. They all draw trend lines at the lowest or highest point of a change in direction ignoring all past news.
It is up to each individual to take that possibility of a trade and do their own research before entering a trade.
When reviewing the ideas, it is all about perspective. If you are a short term trader, then you may be sitting at the stop if not already stopped out.
If you are a position trader, which I have gravitated to over the last few years. I adapt. I see two more entries. The 2nd Zone of Support (1.1013) at minor support. And the 3rd Zone of Support: (1.084 to 1.080).
If we are at resistance at its current price (1.1011) the target would be the 50% Fib Line (1.125). Which is above the first entry point.
If the Euro continues to decline to the 3rd Zone of Support (1.0845) before finding support then the new target would be the 50% Fib Line (1.1169). Which is still above my entry point.
With proper position sizing I could still exit with a profit even if it does not reach that target. As a position trader, I do not exit trades when they fail. Why? because I cannot predict when the market will turn. If I exit on failure I will never get that money back. So I trade small, adapt to the conditions and allow time to work in my favor with a minimum goal of break-even on the first trade.
And yes, I do have an exit strategy.
Opinion:
For some reason this last decline reminded me of the movie Australia with Nicole Kidman. There was a scene when Nicole and Jack were in a canyon during a cattle drive. At the end of the canyon was a cliff. As long as the cattle could be moved with a slow controlled orderly fashion, the cowboys could direct the cattle around the cliff.
Then here comes the bad guys (Drahgi), that throws the lanterns off the cliff causing a stampede. All of the cattle (Traders) are trading on fear and emotion. The first fence (Trend Line) has been broken and we are at the second and third. Will they hold, only time will tell when traders have no defined direction in the markets
If you are a short term trader I recommend you wait until you find which fence (Trend Line) will hold or where the new one will be built.
If you are a position trader, I see buying opportunities for a future reversal as described above.
Technicals
The chart has been corrected to reflect what I see as the current conditions. The pennant and intermediate bullish channel has been deleted.
A bearish channel has been added. The top line was cloned and lowered to another high and the first break down low. This may offer support and is estimated.
The Zones of Support and Resistance has changed as follows.
Zone of Support
1st: Minor Support at 1.013 (The price is currently just below that)
2nd: 1.084 to 1.080
Zone of Resistance
1st: 1.1158 to 1.1085
2nd: 1.136 to 1.139
3rd: 1.147 to 1.149
4th: 1.171
The bullish 6th month trend may offer support.
Emotions are running high and unpredictable. So trade safe.
Conclusion
The 'Most Interesting Man in the World' says “Stay Thirsty My Friends”.
I say, “Trade Small My Friends”.
