Wow, another great day of trading, and we missed 90% of it. We took our short at 1.9000, which we called yesterday, and closed it for a 40 pip profit right before the release of news at 7:30 EST.
From that point on, we waited and watched. We did not go short the second time we hit 1.9000, unfortunately, but many of our aggressive traders did. They played the very common "over reaction strategy" that happens when there is a news release.
Now, here's the part that kind of sucks...we didn't make a trade for the whole way down to 1.8800. That's 200 pips that we had to wait through in order to get to our support level of interest.
We had the chance to go long at 1.8820, but we sat it out because news had just come out and we like to wait a bit before jumping back in after a news release.
There was another chance to long around 1.8800 again later on, but we generally are not in front of the screen in the afternoon. However, I don't think that we would have taken that trade anyway. I'll assume that we wouldn't have. This makes me feel better about missing that kind of move...ha ha.
So, let's get to tonight's trading.
We have to admit that we are very confused. With the recent activity, a nice resistance level has formed at 1.8900. It's one that we are going to watch very closely.
One fear is that it will be tough to find a stop level above there to protect our trade. There really doesn't seem to be anything all the way up to 1.9000.
On the other hand, we are going to leave our support level at the mid 1.8700's. So far, that level has held very well and hopefully we'll have the chance to get in there again and catch another great trade.
On a VERY IMPORTANT note! Although we don't really focus on fundamental analysis, we try to be aware of potential risks due to volatility because of news. Tomorrow is loaded with news. Starting as early as 7:30 am EST and going right through to 10:45 am EST.
Now, not all news releases are the same, but the more there are within a few hour span the more important they become. People get into the mode of reacting to the news and then over react to even the smallest piece of news.
That being said, we will be ultra conservative tonight. Also, we will close all of our trades prior to the 7:30 am EST news release.
Past that, we won't put in a trade again till after 11:00 am EST. At that point we will reevaluate the charts of Cable and find new trading levels (they might actually be the same ones we spoke about in this newsletter).
Truth is, we have had a great week of trading. We've made 360 pips, which far surpasses our weekly goals, and we are not looking forward to giving any of it back.
This, too, gets factored in to our conservatism for tomorrow.
We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with our Elite Forex Trading Course or Forex Seminar.
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