Today is a much more interesting day in the currency markets than we had yesterday. On the 13th of April, eur/gbp pair formed a top and started reversing. So it has been in a down trend for a few days. You already know that in a situation like this you should be on the side of sellers. So, yesterday saw some sort of a reversal, then a range through today’s Asian session and after London open the pair started going down bit by bit. So, a smart trader would have placed a sell stop below 0.8847 level and went down when London session started.
We have very serious forex data today, which can cause daily trends in a number of currencies. Some of it has already been released and cause pretty nice moves in various pairs. I am talking about data from US (Consumer Price Index), which showed that inflation is going up in United States and caused a rally in eur/usd. Another piece of data is to be released in ten minute time and could also influence forex market quite a bit. It is US Michigan Confidence Survey. So, do not rush to place any market orders before the data actually comes out. Play with limit buy and sell stop orders at the levels below support and above resistance.
How you could have traded US CPI data in eur/usd? 4 hours before the news was released the pair was in a range between 1.4440 support and 1.4475 resistance. A few minutes before the event you had to place a sell stop order below support with a stop loss order at 1.4475 and a buy stop 5 pips above 1.4475 with a stop loss order at 1.4437. Having ‘digested’ the news market decided to go down and a short term daily down trend developed. So, you could have closed your order at an even number of 1.4400 or you could still be in a trade and go down as long as the market has stamina. I believe it would have been better to close before this next news is released.
Read my previous posts:
Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.