I need your advice. I am not an expert in forex, however i have few months experience in live account.
Tomorrow, 24 June, is another start of the week. Today, sunday 23 june, i have been doing research and suddenly noticed hidden divergence on EUR/USD H4 timeframe.
The price pair has made Lower Lows and indicator stochastic made Higher Lows, which in results indicates of rise in price action.
I am thinking to myself three versions.
Version A: the pair will hit SMA 200 on H4 somewhere around 1.3070 and rise again strongly.
Version B: the pair will go down to 1.2997 and rise again.
From technical analysis, as i said earlier there is signal of hidden divergence.
From fundamental point, tomorrow two news (IFO-Business climate and IFO-Current assesment) from Germany will be released which may have enough influence on price action, i think.
Version C: If price continues to fall and breaks out 1.2997 point, it may go even to 1.28 and 1.27 levels.
Your opinions are important and welcomed. Thank you.
I’ll tell you what I think: trading using indicators in a discretionary manner as you seem to be doing (and so many trading blogs/articles do) is a very poor way of trading, and is one of the worst strategies you can employ (however it seems to be really popular!)
I’m of the opinion that this type of analysis around the 1.3000 level is not going to provide an accurate idea of what’s going on. The problem is that 1.3000 is a major, major psychological level; also referred to as a VBRN or Very Big Round Number. Everyone will be trying to interpret what is going to happen next with whatever fundamental information is flowing.
I don’t feel that the price action of EURUSD is immediately relevant. I would be more interested in seeing it either bounce off the level, bounce once off a new higher high. Or punch through the 1.3000 level and either create a break out opportunity or bounce and set a new lower low.
In my opinion and with my trading strategy- that’s the safest way to trade around these levels.
If you haven’t done a lot of reading on psychological levels; it would be a really good idea for you to do so.
EDIT: Oh yeah. When you want to trade a break out of a level, you want to actually confirm that the level has broken and it’s not a false breakout. I typically use a close past 50 pips of the level as a confirmation of a true breakout. Remember, areas of support and resistance are more like zones than just individual lines. So if you were to enter a trade 1.2997 there’s a decent chance price could still whip back the other direction and post a loss.
