I posted this on twitter friday afternoon re euro/gbp. “pullback to 90.20 or 90 would be very logical bounce back up for Monday am for me. All emas pointing up. could go a long way next week”.
Unfortunately i don’t trade friday afternoons so my rules initially kept me out of the trade. I then stayed up half of Sunday night to catch the damn thing ! Eventually I got my orders filled at 90.20 and later on 90.12.
Arrow shows approx time i posted on twitter to look for entry UP
Price was clearly coming down on the 15 minute chart above. Why would i think that its going to go back up again ? See my analysis further down the page.
What i thought i would do today is give you a detailed analysis of this pair over various chart time frames, so that you can learn for yourself, how to look for clues.
If you are new to forex, i strongly recommend you concentrate on 1 or at most 2 pairs to start with. Each have their own characteristics and you will find that you soon get a “feel” for it.
I still only specialise in 3 or 4 pairs. gbp/$, euro/$, chf and euro/gbp. I will occasionally look at aud and jpy, but only if i see clues on daily charts.I had a 600 pip move in February/march on jpy that was purely off the daily chart.
Take a look for yourself. It is so obvious now and to be honest, it was so obvious then, before it happened. I will write an article explaining this trade at some point in the future.
Back to the euro/gbp trade. The reason i said it could pullback to 90.20 was the 34 ema on the 15 minute chart and the 200 ema on the 4 hour chart were both in the same area. Price went through that.
My second area of probable change was 90.00 for lots of reasons (had it not been friday pm i would have entered 1st lot here).
1) 90.00 is a HUGE psychological number. It broke here previous days & a pullback to same place is logical to me.
2) There were emas on the 30 minute, 1 hour, 4 hour & daily charts all in this area. It went through here. Eventually it stopped at 89.78. Just above a fib from fridays chart & the 34 ema on the 1 hour. It bounced back up.
This same 1 hour candle CLOSED ABOVE the 90.00. I would have taken my 2nd lot here with a stop just below the 89.78 previous low. Candles closing above/below important places are very significant.
Reasons to suspect price will keep going up
The key word here is “suspect”. I have no more of a crystal ball than you. What we must do as forex traders is to analyse, calculate and then take action. I may be completely and utterly wrong here BUT i am satisfied that my trades were based on sound, logical reasons.
Price has broken & is above all emas on 1 hour chart
This screen shot was taken 10.30 am bst Monday 27th April. As you can see price has broken above the 200 ema & the strong 90.00 area. The 5 ema has crossed the 200 ema. Price could well pullback to the 5/200 ema to give another chance to enter long. If it breaks (candle closed) below here, we start to consider short.
Daily chart;
Daily chart. Price has closed ABOVE 34/55 emas
The daily chart is now at a critical point. A 34/55 cross up or down here in the next few days will probably show us which way price is going to go on this pair for the next few weeks. A 34/55 cross up here would suggest to me that price will move at least 300 pips to 93.00 area. Why there ? Trend line on daily. A cross down would signify 87.00 area. See chart below;
34 cross up tells me target trend line. Cross down target 200ema
O.K, hopefully this has given you lots to think about and will help you learn to look at the charts for clues (especially the longer term ones). I have made 50 pips (off 2 lots) so far from this analysis and have the balance running with stops at entry.
Price may well fall back today, but this analysis will be useful to me for the rest of this week as I am looking mainly at the daily chart.
I will post todays results later on. Good luck to all.
HI MARC WELL DONE WITH EURGBP BUT IT DID A FALSE BREAKOUT TO THE TOP WITH YOUR EXPERIENCE WHAT WOULD YOU HAVE DONE WHEN IT REVERSED SOUTH WITH SUCH A GAIN OF PIPS .YOUR ADVICE WILL BE APPRECIIATED A 3 YEAR BATTLING TRADER CHEERS MIKE
hi mike. to be honest i thought it was going to keep going up. but the markets have been so choppy this month that it is difficult for all of us. I did manage to make some pips in both directions, but should have made more. I did say in the analysis though that you have to consider a short if price broke the 90.00 price and 15 minute 200 ema. have a look at my results post “27th april results” for more detail