Focus on the euro is
certainly valid when trying to understand the risk environment, but the euro hasn’t
necessarily been the best trading pair especially when the daily is still
congesting and there is little trending clarity on the daily chart. There are
ways to capture movement in the euro, the EUR/AUD has been my preference.
The idea that the EUR/USD is the best
way to trade the euro often frustrates me in fact, focusing on this pair solely
is going to limit potential opportunities when it comes to price movement and
market trend clarity. Today I’m going to compare the EUR/USD to the EUR/AUD and
show you how to compare pairs and focus on those with the best clarity.
The process I follow to identify a
list of pair I want to watch starts with the daily time frame. I look for
market clarity which means I focus on my 34EMA Wave and GRaB candles (which are both available on the IBFX Trader4
platform in the Custom Indicators folder) The idea is to focus on pairs
with a daily chart that is in a trend. This doesn’t mean I only trend follow,
but it does mean that there is a clearer picture of who is driving the market
(and market psychology) when there is a trend.
Past performance is not indicative of
future results
Notice
that the daily chart of the EUR/USD is trading generally lower with a dominance
of red GRaB candles so there is bearish sentiment and momentum, but without
lower lows, there is no downtrend. The 34EMA Wave is moving more at a “two to
four o’clock” angle and this occurring as the pair is having difficulty attracting
selling pressure near, at, and below the 1.2400 major psychological level. This
is a non-trending pair and therefore the clarity is low.
The euro is fairing somewhat well
against the U.S. dollar, and therefore the pair is not moving sharply lower
despite the greenback’s climb to 83.00. The Dow has been strong so certainly
some risk appetite will help the euro, but the risk appetite is not pushing the
dollar lower in the usual push-pull of the dollar-Dow that we see so often.
Past performance is not indicative of
future results
The
daily EUR/AUD has both the consistent red GRaB candles and the “four to six o’clock”
angle of the 34EMA Wave. The dominant psychology is bearish and there is a
clear trend. With a clear trend there is a higher likelihood of selling
pressure at resistance levels as well as more effort to push to lower lows. The
clear daily trend also helps with time frame selection. My guideline is that I
can follow the trend on any time frame (15, 30, 60, 240-minute and of course,
the daily) but if I am counter-trend trading (in this case, getting long in an
overall downtrending pair) I will only do so on short-term, “nimble”, time
frames like the five, 15, and 30-minute charts with very rare exceptions for
the 60-minute.
Here are some other stats on the EUR/AUD for
those traders that are unfamiliar with its spread and volatility. Here I am
using the IBFX Performance tool on the IBFX.com website as well as the IBFX
Volatility Indicator.
Past performance is not indicative of
future results
Past performance is not indicative of
future results
As an
active forex trader and Chief Currency Analyst for InterbankFX.com I do write
for a number of sites all over the web and I am happy to say that I will be
posting updates atwww.IBFXconnect.com. MyActivity Boardwill feature the trades from my trading account as well as
intraday commentary.
Start the discussion! Questions?
Comments. Leave it here at the Daily Forex Trading Edge for Raghee to
personally answer. Using the icons at the top of the article to forward this
update to a friend via email, post it on Google or Facebook or simply print it
out for reading later.
Forex trading is one of
the riskiest forms of investment available in the financial markets and
suitable for sophisticated individuals and institutions. The possibility exists
that you could sustain a substantial loss of funds and therefore you should not
invest money that you cannot afford to lose.
Posted By:
Raghee Horner
Raghee Horner, chief currency analyst for IBFX, provides her personal daily trading tips and insights through Dailyforextradingedge.com. An experienced trader with over fifteen years in the markets, Raghee is the co-founder of EZ2Trade Software and has taught her brand of technical analysis and charting strategies to students all over the world. She is an international author and has taught currencies, futures, and equities trading for over a decade.
Focus on the euro is certainly valid when trying to understand the risk environment, but the euro hasn’t necessarily been the best trading pair especially when the daily is still congesting and there is little trending clarity on the daily chart. There are ways to capture movement in the euro, the EUR/AUD has been my preference.
The idea that the EUR/USD is the best way to trade the euro often frustrates me in fact, focusing on this pair solely is going to limit potential opportunities when it comes to price movement and market trend clarity. Today I’m going to compare the EUR/USD to the EUR/AUD and show you how to compare pairs and focus on those with the best clarity.
The process I follow to identify a list of pair I want to watch starts with the daily time frame. I look for market clarity which means I focus on my 34EMA Wave and GRaB candles (which are both available on the IBFX Trader4 platform in the Custom Indicators folder) The idea is to focus on pairs with a daily chart that is in a trend. This doesn’t mean I only trend follow, but it does mean that there is a clearer picture of who is driving the market (and market psychology) when there is a trend.
Past performance is not indicative of future results
Notice that the daily chart of the EUR/USD is trading generally lower with a dominance of red GRaB candles so there is bearish sentiment and momentum, but without lower lows, there is no downtrend. The 34EMA Wave is moving more at a “two to four o’clock” angle and this occurring as the pair is having difficulty attracting selling pressure near, at, and below the 1.2400 major psychological level. This is a non-trending pair and therefore the clarity is low.
The euro is fairing somewhat well against the U.S. dollar, and therefore the pair is not moving sharply lower despite the greenback’s climb to 83.00. The Dow has been strong so certainly some risk appetite will help the euro, but the risk appetite is not pushing the dollar lower in the usual push-pull of the dollar-Dow that we see so often.
Past performance is not indicative of future results
The daily EUR/AUD has both the consistent red GRaB candles and the “four to six o’clock” angle of the 34EMA Wave. The dominant psychology is bearish and there is a clear trend. With a clear trend there is a higher likelihood of selling pressure at resistance levels as well as more effort to push to lower lows. The clear daily trend also helps with time frame selection. My guideline is that I can follow the trend on any time frame (15, 30, 60, 240-minute and of course, the daily) but if I am counter-trend trading (in this case, getting long in an overall downtrending pair) I will only do so on short-term, “nimble”, time frames like the five, 15, and 30-minute charts with very rare exceptions for the 60-minute.
Here are some other stats on the EUR/AUD for those traders that are unfamiliar with its spread and volatility. Here I am using the IBFX Performance tool on the IBFX.com website as well as the IBFX Volatility Indicator.
Past performance is not indicative of future results
Past performance is not indicative of future results
As an active forex trader and Chief Currency Analyst for InterbankFX.com I do write for a number of sites all over the web and I am happy to say that I will be posting updates at www.IBFXconnect.com. My Activity Board will feature the trades from my trading account as well as intraday commentary.
Start the discussion! Questions? Comments. Leave it here at the Daily Forex Trading Edge for Raghee to personally answer. Using the icons at the top of the article to forward this update to a friend via email, post it on Google or Facebook or simply print it out for reading later.
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Raghee Horner