Trends continue on Wednesday
Another cool day for day trend traders! Currencies have been going in the direction of the most recent direction that they have taken, metals are slightly bullish and oil decides to collapse. A pretty interesting and adventurous day for those who enjoy action in financial markets! Of course, action is great when you are going with the flow, not against it. If you know how to trade news, support and resistance, you had a lot of opportunities today. Let us look at some of them and try to predict what might happen with some of securities in the nearest future. We might be wrong, but we have to learn how to analyze markets on a daily, weekly and monthly basis, taking into account both technical and fundamental tools. Here we go!
Gbp/usd falls through the floor after the news
News from Great Britain set pound on fire. Gbp/usd collapsed. My prediction was right. Pound had to go down and it did. The entry for sell order was at 1.6349 level (depending on your charts and platform the level may differ a few pips). If you trade with two orders during news, you could close one at yesterday’s breakout level (Asian session high) of 1.6250 and leave the other to go till even number of 1.6200 or even further. We see that the pound has not stopped falling and I predict that it will go till 1.6100 or possibly 1.6050 before finding serious support. However, nothing is certain in the markets, so be sure not to risk more than you can afford. And of course, follow your own trading rules and principles!
Eur/usd follows pound
Eur/usd is behaving in the same fashion as gbp/usd. It reached its peak last week and now is going down in waves. If you look at 1 hour chart of the pair you will clearly see the channel and when the channel was broken the pair collapsed. Of course, it happened during European session. You should not forget that most often Asian sessions are for counter trend moves and European sessions are for moves that happen in the direction of the prevailing trend. This tendency changes from time to time, but general idea is that you should trade European and American sessions if you are planning to trade a trend. So, you could place a sell top below 1.4399 level and trade a breakout in the direction of medium trend, which is of course down. In my opinion eur/usd is going to 1.4000 level.
Interesting price action in eur/cad
The last pair which I wanted to mention is eur/cad. It has already reached my medium target (I discussed it yesterday) and is going further. Price action of the pair was very interesting today. In the same fashion and timing as eur/usd and gbp/usd, eur/cad went down during European session down around 120 pips. It then rallied back to breakout level, then formed a reversal pattern on 5 minute chart (123 pattern) and collapsed again. So, you could have taken the first breakout down during European session and after a counter trend rally one more short trade by placing a sell stop order below 1.3920 level.
Fundamental news for tomorrow
So, I guess you would agree that the day was really interesting. However, the best is always (yet) to come. Tomorrow we have very important data from Switzerland (Swiss National Bank Rate Decision) at 7:30 GMT and data from Europe (Euro-Zone Consumer Price Index) at 9: 00 GMT. I believe these can create big intraday rallies, possibly against the trend. Let us wait for tomorrow and see what happens. Don’t overtrade and do not risk more than you can afford.
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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.