eur/usd

Time for a new post, or well over due from the emails I received over the past few weeks. I dont wish to post up new charts just for the sake of rehashing what has already been said. However, many of you want to see more of what I look for and here is a break down of the recent Euro action with the US Dollar.

My ten mile view is shown here together with horizontal lines showing places where I expect price to react in the future. We have broken below major support and resistance which is above the highest blue line. I am sure you can all see this without me pointing it out.

The lines have been drawn at the first area where price could react, and in reality price is going to have plenty room within a range of prices where it will unfold what is in the minds of pro money. Where price breaks from a range it is best to draw a box over the entire range. I have placed lines here to help keep the charts cleaner looking and easier to read.

Weekly chart.


The upper blue line is where price had the opportunity to take a breather and go higher. The pro's decided there is better profit to be had below and price got pushed hard through this potential area for a small reversal. This is good intel in that there will be lower prices to come for some time yet. Look on the above chart for those areas.

The lower line is taken from a bullish move way back in 2003. Even now it has an effect and prices from years back will have the same effect. Major price swings on higher time frames produce better moves that this one and we are forming one to the down side as I type this and it appears to have a few months left in the overall move down.

Daily chart.


This is now the most viewed time frame for most of the worlds major money firms. I have drawn a small black line in to show a range price formed and eventually broke lower from. Given that no bullish interest was in the market, pro money has to create the illusion of buying in order to load up. What you see are a few strong individual days where long bullish candles show plenty buying.

But as I mentioned in the past, a question you always ask of yourself before taking a trade is, who am I buying from if I go long here at this price?

The answer for a valid trade must always be, the herd or the retail trader. I will throw in some banks and hedge/pension funds into that too, even some of those folks chase price. Dumb move.

When price sets into these ranges you have two options open. Either have the capital to withstand the days of price going against you, or get out with some profit and wait for the continuation. If the bullish move was genuine you would see price make progress to the upside. All we see here is price getting push back down the following day.

It should come as no surprise that when the break by the bears is made, price moves away quickly. There were two days when entries short showed up with two small green candles. Given price was here not long ago and failed to go higher, we know that there cannot be enough buyers at this price area to push price higher and logic has to come into play.

4hr chart.


A little closer in on the price action and this break out of the bottom of the range is clean and just look at the tiny bullish reaction in the two green candles. Clearly no buyers here and pro money know from this there are no long trades in their way and all that is now required is time to get more orders placed before the big push happens.

Three candles after the last of the two little green candles you see how they achieved this. A nice long spike into the candle that broke the bottom of the range and this took out all shorts, got the foolish long and netted enough orders to allow the market just fall quickly soon after. If you measure the points in that candle you can see how most stops will have been taken out. Most traders wont be able to take that kind of expensive draw down. The gutted feeling of getting taken out and then see the market go in the direction they had figured is a real head wrecking for lots of people and I hear it all the time. Worst of all is, on the next trade the same traders want to get even with the market and double down on the trade to make back the loss and get more profit than before. Thats nothing more than a fast way to destroy and account. Each trade has to be taken on its own merits and have a know entry, target and stop.

1hr chart.


On this chart I have shown the candle which removed short stops and was a clear sign of pro money taking this lower. The candle went deep into the body of the candle that showed the range above was broken and such significant moves do not just happen, all this is carefully planned and executed.

15min chart.

This zoomed out chart is to show you where taking trades from the top of a range in a bearish market is the only place to take lowest risk trades. The blue line is taken from the monthly chart above and see how it is still holds true. knowing ahead of time for all of these places is an invaluable piece of information. The price action that unfolds are price reaches these areas tell the story of continuation to the down side.

5min chart.


This is the same as the above chart on the 5min time frame and a little closer in again. Note the move away from the blue line, it is quick clean and no disputing pro money does not want to take this higher. As price moves away it eventually drops off dramatically. This is the clearest sign that anyone could spot and its only a matter of time before the pro's bring price back slowly checking for buyers and also to see if more short orders will come in as price gets close to where it originally broke from. The small black line is the absolute origin and many times it wont get that far into the original break. Another short there was low risk and a stop either above the black line or above the blue line. The risk/draw down is a factor of your position size and how much heat you can take.

1min chart.


Just for the fun of it.

This is the time frame that sends most folks to the emergency ward at the local hospital and trading this is for the quick and accurate out there. I am showing this so that you can see the price moves all line up in this time frame from the 4hr down to the 1min. The reaction away from the blue line and the subsequent move away from the black line to the most recent supply is very obvious and easily tradable.

Now that you know where price is and that the probability of more bearish activity is strong and that parity is a nice juicy target, it is for you to make the next calls as price reaches those areas. Price always falls faster than it rises. In order for their to be bullish activity there must be not only enough long orders to push it up, price must also be supported or else the market will drop off. For short selling there is no need for any kind of support because most people are naturally negative and creating an environment for fear/panic etc is all too easy to do with the media taking up the lead on the fear/panic stories and trying to tell folks that the news drives the markets. No, the markets is what make news and not the other way around!