Keep your profit goals small

There are reports at 8:00 (EUR), 8:30 (GBP) and 10:00 (EUR) am EDT, and 12:30,
2:00 and 6:00 (USD) pm EDT that could affect the prices. The Beige book at
6:00 pm should be noted as that is usually a quiet market time for the USD
and could cause more movement than usual.

EUR/USD

Support points: 1.2807, 1.2788,
1.2755

Resistance points: 1.2825, 1.2835, 1.2845, 1.2858

This pair moved down today, but not as dramatically as the Pound and is still
in a congestion pattern at a support level in the near term, though it still
looks like to form a head a shoulders pattern on the long term charts. The
test of the former lows will be crucial as so far it has formed higher lows
while not making higher highs.

As the daily volatility continues to be low (69 pips average) keep the profit
goals smaller as well.

GBP/USD

Support points: 1.8915, 1.8870, 1.8840 and 1.8805

Resistance points: 1.8982, 1.9000, 1.9025 and 1.9044

The GBP made the expected move down and looks set to follow through this
evening and tomorrow. Trend/momentum traders watch for moves up to resistance
as re-entry points for a continued move down. We use the 4 hr chart as an
indicator of market conditions for the next day’s trading. The yellow moving
average line is the 89 ema which we use as a trade bias indicator along with the
MACD. The daily average volatily is at 101 pips so gauge your profit targest accordingly.

USD/JPY

Support points: 115.50, 114.75

Resistance points: 116.40, 116.50, 116.72 and 117.05

This pair made the expected move down and is now in the process of retracing
that move and is near resistance points. It moved very quickly up off of
support today and while the down move could continue it did test some near-term
support. Trading this cross for small gains on breakouts or fades is best
right now, especially considering that this cross also has a very low daily
volatility (64 pips).

General Remarks

One of the hardest things about learning to trade is sorting through the
mountain of information available and determining what is useful and what
is not. Much of what is out there is geared toward the larger time frame position
trading type of accounts. Many sites give financial opinions on the big
fundamental picture that are interesting but not really applicable to a 10
pip trade on a 5 minute chart today. There are also a lot of proprietary
indicators that work well in one kind of market, but not another. Honing
all this down into something that is usable on a daily basis is a real challenge
(and can be expensive as well). A good trading system and mentor can help
immeasurable with this process.

Most new traders whose accounts are under $10,000 need to be trading off
of the shorter time frame charts (15 minutes or less) to keep the risk/reward
ratio in line. The longer time frame charts can give the directional bias
and crucial support and resistance levels for the day, but the actual setups
will occur on a 15, 5 or 1 minute chart depending on your profit goal. Fade
traders will typically use 1-5 minute charts to precision time their entries
and look for only 2-5 pips per trade. Momentum/breakout traders will look
for similar signals from two different time frames (one longer, one shorter)
to manage their entries. Once you determine your trading style and which
charts give you the right information it is best to stick with them and not
possibly erode your trading confidence by “chart surfing” after entering the
trade.