EUR/USD Trading for August 8, 2014 (2/3 ITM)

I started watching the EUR/USD around 2AM EST, and immediately the thing that popped out was the pivot level working as a robust price level. During a 25-minute stretch leading into the open of the European session, the pivot was tested but held pretty well along the line. The retracement back down went about 4-5 pips, which doesn’t seem like much, but during the 2AM hour on a summer Friday, that’s about as much movement as you might typically obtain.

1. Given that the pivot had held well earlier, I was willing to get in at the pivot if it reached back up there again. It did on the 2:15 candle, went above by a pip, and closed below the level. So on the re-touch of pivot on the 2:20 candle, I entered a put option.

 photo Screenshot2014-08-08at104526PM_zps4f215fb2.png

As you can see from the chart image, this trade lost by about ten pips. If I can learn anything from this, there are two things that come to mind:

A. Support and resistance levels created from previous price history during non-standard trading hours tend to be less useful than those created in more volatile time periods. They simply don’t hold as well. Indeed, I did have the pivot level to base this trade on, but I almost surely would have looked for further confirmation that the pivot level could be a prospective turning point. But I already had that from the congestion at the pivot at the 1AM hour, which is a down period.

B. Trading near the open of a new continental trading session tends to bring in a higher influx of volume. So a price level that may have held during the Asian session may not hold as well as it might upon the open of the European session.

Despite the profound non-winning result, I wouldn’t necessarily call it a “bad trade.” Nonetheless, it’s definitely something I can learn from based on the two talking points above. But for anyone who has been trading binaries long enough will have experienced the phenomenon of taking a trade, only to have it fly against you from the outset and never turn back.

2. The uptrend that coincided with my entry into the losing pivot trade lasted over thirty minutes. In the process, the market covered over 40 pips in the upward direction and broke resistance 1. Just before 3AM EST, the market began settling down again. Eventually by the 3:05 candle a conspicuous level of resistance was created from the recent price movement at roughly 1.33961 (the price that seemed to best match up with the top of the candle bodies).

By this 3:05 candle, two consecutive red, bearish candles had formed lending validity to the notion that the market could be heading for a retracement back down. So on the touch of 1.33961 on the 3:10, I felt that I had enough evidence to support the possibility of the market returning back down a bit.

 photo Screenshot2014-08-09at123249AM_zps8d007798.png

This trade won by about two pips and it eventually did return down below resistance 1.

3. It would take over four hours before this next set-up would occur. The resistance 1 (1.33885) level was in play here. There had been some sensitivity shown to it around 3:30 and 5:15.

When the market came down to reach resistance 1 again on the 7:20 candle there was a nice rejection. On the 7:25, price moved about six pips above 1.33885, demonstrating decent buying movement above resistance 1. When price came down to touch 1.33885 on the 7:30 candle, I entered a call option, expecting the previous price congestion, the reasonably strong current buying willingness, and resistance 1 pivot point itself to act as factors to evidence this particular trade set-up.

 photo Screenshot2014-08-08at104612PM_zpsc542f4d5.png

This trade initially went against me by 2-3 pips. But I had a full 15+-minute expiry in play, and with enough market volatility this trade eventually had the means to turn around. It was up by eight pips at one point on the closing candle before settling in at a five-pip winning margin.

So after a not-so-favorable outcome on the first trade, I was able to follow up with two nice winning trades, which always offers a good way to end the week.

VN:F [1.9.22_1171]
Rating: 5.0/5 (1 vote cast)
EUR/USD Trading for August 8, 2014 (2/3 ITM), 5.0 out of 5 based on 1 rating