EUR/USD Price Path

Today’s EUR/USD day trade is a great lesson in trading and forecasts.

Yesterday EUR/USD

Yesterday morning EUR/USD upside points as follows: 1.1214, 1.1221, 1.1227, 1.1236, 1.1249, 1.1256 and 1.1264.
EUR/USD traded to 1.1227 then 2 hours later eventually dropped to 1.1183. Note 1.1227 is the 3rd point to cross in order to trade higher. It failed.

Where is 1.1183 ? Yesterday’s supports 1.1173 and 1.1161. The 1.1183 point is located between 1.1190 and 1.1173. EUR/USD dead stopped 2 pips above the mid point at 1.1181.

At the 10:00 am hour, EUR/USD traded to 1.1136 and the 4th point in the overall 7 1/2 hour allowable price path.
After 10:00 am, EUR/USD traded to exactly 1.1156.

For the allowable 7 1/2 hours, EUR/USD traded 47 total pips and 53 pips to include 1.1236 at 10:00 am.

However as instructed to interested traders and as traded everyday, trade duration is from 2:30 am to 10:00 am EST then exit and take profits for the day. As the central banks offer trades from the allotted 7 1/2 hours time frame, traders don’t want to compete with the many central banks in the market from 10:00 am to 12:30.

This means the original traded price path from 2:30 am to 10:00 am EST may or may not hold and no trade is easy, nor guaranteed nor possibly profitable. Can’t trade a gamble or roulette wheel and the smart trade is stay away.

Today EUR/USD

Note the same exact price path from yesterday as follows: 1.1214, 1.1221, 1.1227, 1.1236, 1.1249, 1.1256 and 1.1264.
The exact same trade as yesterday morning is now today’s exact same trade. But really?

EUR/USD traded and failed at 1.1221 and the 2nd point in the price path Vs yesterday’s 1.1227 at the 3rd point.
Yesterday morning most vial supports 1.1161 and 1.1173. Today 1.1159 and 1.1168.

Overall price path is the same but below supports radically changed.

To take this to true technical levels, at the China open last evening, supports were located at 1.1171 and 1.1182. So today’s day trade supports changed significantly.

The difference to support levels was interest rates and as interest rates change then supports levels must adjust. Overall supports and overhead resistance levels as well go through constant adjustments especially within a 24 hour trade period.
The only method to know exactly the locations of supports and resistance and to trade under exact entries and targets for day trades is to constantly monitor interest rates.

As EUR/USD was the tracker currency all week, the exact same methods hold true for every nation’s interest rates and currency prices. Interest rates change the supports and resistance points and changing prices means a daily and constant adjustment to price paths. Rare to see the same price paths within the same 24 hour period and actually rare to see it at all.

This week’s information is a tiny fragment to the many nuances of a currency price as its evolution is constantly revolving. A day trade requires constant monitoring and re factoring the interest rate to the currency price while a weekly trade requires no supervision.

The 7 1/2 hour time allotted to trades was actually a favor from the ECB because it afforded an opportunity to even novice traders to profit. The prior 8;30 am time failed to allow even the best of traders to profit as the computer beat every traders on the planet as the 8:30 price was finished trading within 1 hour.

As I inform traders, whatever you think you know or thought you knew about trading currency prices must be thrown out the door.

 

Brian Twomey