*Taking a look at the analysis of a EURUSD short trade position entered this week*
Welcome back to the blog! I hope you have all had a fantastic week so far and you are keeping your risk in check and hopefully benefitting from some of the fantastic price moves in the markets this week. Global stocks have been moving, FX volatility is high and this is moving currency pairs and there is also a host of fundamental and macroeconomic influences.
The US election is coming closer with Biden coming ahead in all pre-election polls but this does not mean a certainty of winning. In 2016, Hillary Clinton was favourite in the polls right up to the election but Trump still won, however, markets are pricing in a Biden victory. Brexit negotiations are coming closer and closer to the “final” deadline and there is mutiny in the ranks in the Houses of Parliament with the prime ministers scientific advisors disagreeing with his recommendations on local lockdowns. This is causing chaos for the Pound and FTSE (more on this later).
In this blog post I am going to show you a new trade position I entered this week and talk you through my pre-trade analysis and my intended trade management. It is not a long term position and instead I am trading near term price action and current market momentum. Let’s take a look at the charts for the EURUSD FX currency pair.
The chart above shows the basics of my pre trade analysis for this intraday short trade. As always I keep things simple to start with and work my way up by adding the technical indicators that I use for this type of trading strategy. Below is a list of key points to the short trade bias.
- Bullish trendline broken.
- Lower lows made, clear breakout of previous trend.
- Price trading below both 50 and 200 EMA’s before retesting them from below.
- Lower high forming at a zone which contains multiple points of analysis (EMA’s, Daily Pivot Level).
- Custom indicator showing very low numbers which is consistent with a lower high and price reversal.
The premise behind this trade is a trend reversal play. I was waiting for the current bullish trend to show signs of a reversal before waiting for the best entry point which is a lower high and entering on a retracement. I do not enter positions upon a breakout because in my opinion this is not the best entry point. It is much better to wait for the price trend to show it’s hand, confirm the breakout is real, make its next swing low point and then get in on the trend when it retraces.
This way you are selling high (not selling at lows), you are trading with the trend (the new trend direction) and you avoid the potential for a fake breakouts. The worst case scenario is then that you might not see a price retracement and miss out on the move but that is okay, making no profit is better than making a loss.
Higher timeframe analysis.
If you are interested in my higher timeframe analysis for the Euro Dollar FX currency pair and what I think price might do over the next few weeks and months then please read through my previous blog post. The link is below.
Let’s look at the 1hr price chart for EURUSD as at this morning.
Once the lower high was formed around the point I entered the trade, price actually did consolidate for quite a while longer with around 12 hours of fairly tight price action. However bearish momentum did return and this is where the profit arises.
I am looking for price to make a lower low here (which is has) and then perhaps retrace back in to the EMA’s and previous price support zone before continuing on it’s way down to my profit target level at 1.16200. This is a previous price support zone and I think it is a good place for profit taking.
There is potential for price to go lower if 1.16200 breaks and this is way, I will me managing this trade position manually. The 1.15800 level is a higher timeframe price zone and it is taken from a much larger view of this currency pair. It is explained more in my previous Euro Dollar analysis blog post.
You can track the progress of this trade live via the TradingView platform by clicking on the following link.
FTSE100 Short Trade.
Here is an update on my positions I have open on FTSE100 index. As you know, I have been short for some time and this is still paying off with bearish pressure continuing to weigh on the index and I see no signs of it reversing any time soon.
As you can see on the 4hr intraday chart above, the selling pressure has been strong this week with price falling over 4% from the recent highs at 6035.00 and price is now sitting back at the 5800.00 lower support zone. If this level breaks then I can see a lot of downside potential.
If you haven’t watched it already, I created MY FIRST EVER YouTube video which consists of 10 minutes of technical analysis and also some basic fundamental analysis of the FTSE100 stock market index. In that video I predicted this weeks sell off and if you followed my price predictions you would be holding some profitable trade positions right now.
Check out the video here.
If you are interested in learning my personal trading strategies, please consider my Mastering The Markets – Retail Trading Course. Head over to my Trading Education page to check out all of my education packages and the deals available.
All my technical analysis is done using the TradingView platform. You can get access via the link below.
My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.
FTMO Trader Funding Programme.
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DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.