EUR/USD Trading for July 14, 2014

Today was an interesting trading day with many ebbs and flows in the market that made things interesting. Summer trading tends to always be lower in terms of volatility, but it did feel more like a day during the fall or spring where there’s a lot more up-and-down. And this, of course, was just the European market hours and overall pip movement was still relatively sparse as can be expected.

My first trade came on the 2:15AM (EST) candle. The market saw a surge of volume on the 2:05 with a rejection of the pivot level of 1.36033. Technical cues such as support and resistance levels don’t hold up as well when volume picks up in the market either through the natural increase in volatility from more traders entering the market during a market open (or resumption) and from news releases, of course.

So I waited for another touch and rejection of that level to better understand whether it was likely to hold or not. It did touch and reject on the 2:10. After those two forms of price confirmation, I was able to get in on the re-touch of 1.36033 on the 2:15 candle. It held briefly, but this was the very beginning of the uptrend for the Euro and I lost this trade by a little over one pip.

After this, the pair was passing through its daily pivot points given how close they were together after a low-volatility trading day on Friday. But nothing set up very well at any of these levels so I kept sitting on my hands.

The next trade I considered was a put option above the resistance 3 level. As I’ve mentioned previously, whenever price gets out of its daily pivot point range (above resistance 3 or below support 3), it’s likely to fall back into it eventually in many cases. That doesn’t mean to simply take a trade whenever it gets out of that range; only if something has the chance of setting up.

In this case, price had wicked on two consecutive candles. The first was green; the second was red and formed a bearish engulfing pattern. Hence, this is a textbook-ish indication that the market could reverse. But again, in short-term binary options, getting in at a favorable price can be extremely important when trades are decided by such a slim margin. So I was waiting for price to get back up to the top of the previous candle’s body to get into the trade. Alas, that didn’t happen – just a few tenths of a pip away from what would’ve triggered my action to get into a put option – but it would have been a nice trade had it set up to my liking.

Despite an opportunity that did not materialize, another trade set up about twenty minutes later. Price was already back down to challenging the resistance 2 level of 1.36128. The bearish 4:50 candle rejected the level. And there was already some previous price congestion here during the 3AM hour to support a potential bounce. So I entered into a call option on the 4:55 candle. It fell through and closed below 1.36128. But in the following ten minutes, it rose back into the in-the-money position just barely. But on the closing candle, it fell back through and I lost the trade by just under a pip.

After this, the market hung around the resistance 2 level. Put options could have been appropriate perhaps, but I was weary of the thin trading channel that had formed. That is, even if I take a put option expecting the market to go down or at least hold underneath resistance 2, there is always the chance of price finding a support level, in essence, just a pip or so below my entry. That makes it too much of a 50-50 gamble for me, so I passed on the opportunity.

That was it for the day. 0/2 ITM, so kind of like the start of last week where I went 0/3, but that’s all part of trading.