Read Larry Connors' blog – Short Term Trading Strategies
EUR/USD
Resistance points: 1.2738-44, 1.2760, 1.2790, 1.2805 and 1.2825
Support points: 1.2700, 1.2670, 1.2660, 1.2500 and 1.2540
This pair moved up to resistance on the 4 hour chart (below) and has since back off. We are in the middle of everything in a “wait and see” mode. The price bars remain on support on the daily chart. Wait for a break out past current ranges keeping in mind the prior highs and lows and support/resistance points. There probably won’t be much action until the news reports.
Now this is a nice picture of consolidation during a light trading volume time (15 minute chart). If prices break below support there is a slight down bias heading into the evenings news trading, barring unexpected bad dollar news. Quick traders like me who like to amuse themselves in the evening could even nab a few pips on the way down to the support at 1.2700 (you can see that on the left of the chart) if the smaller time frame charts show it breaking down.
GBP/USD
Resistance points: 1.8890, 1.8905, 1.8963, 1.8988 an 1.9030
Support points: 1.8835, 1.8815 and 1.8785
The GBP broke out to the upside on news yesterday and has pulled back and prices are in the 38% retracement area now. The 1 hour chart below shows the action clearly. Whether this move continues up on tomorrow’s news is the big question. So far this pair has shown more upside resiliency than the EUR. This is another “wait and see” time that the news will decide for us tomorrow.
USD/JPY
Resistance points: 117.76, 117.82, 118.00 and 118.15
Support points: 117.00, 116.80, 116.50, 116.20 and 116.00
The JPY is trading within a range that shows well on the 1 hour chart below. Until this is broken quick trades like the one detailed below are one of the best ways to trade this pair.
The five minute chart below shows a trade setup and follow-through that made 8 pips during a light trading market time on the open of this pair. I only do this on the JPY. The entry was made near the end of the bar with the red cursor line through it. The RSI was above 70 near 75, the prices were well above the 89ema and they were near previous price highs for the day and the bar closed with a tail above the Bollinger Bands. I tried to get in at 117.75 but my broker didn’t fill me there, I had to be content with 117.73, but it still made the 8 pips I look for in trades of this nature. Sometimes you have to be content with 6 pips. The setup would have been perfect if there had been more of a large move beforehand and it was a higher volume time, so I did not trade it with a large amount at stake. Still, the technicals worked. This setup will also occur on the 15 minute chart and in fact it did agree at the time. You will catch a few more of these using the 5 minute however.
General Remarks
I would like to give credit where it is due since I know you can’t read the fine print on the bottom of these charts and let you know that they are provided by e-signal. They offer many different proprietary studies that can be helpful and many systems are designed to work off of them. We have used them for a long time beginning with stock trading back in the bull market days. They show up well in this format and don’t take up all the black ink in your printer in case you are printing this out.
The support and resistance listed in this commentary have nothing to do with pivot points and if you would like to trade off of those the methods detailed here can work just the same way using the technicals I talk about as confirmation of the setup at the pivot point area. Sometimes pivots and support/resistance points coincide and that makes the signals at those points even more powerful. I have spent a lot of time in the past putting pivots on my charts and there are programs that will put them there automatically, I just like a cleaner looking chart to trade from and found I traded as well without them. This is the kind of thing you have to experiment with for yourself to see what helps you pull the trigger successfully.
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