“INDICATOR OF THE DAY” - TECHNICAL CONFLUENCE
While we do not recommend that traders overwhelm themselves with the use of an unnecessary amount of technical indicators, we do find it useful to base some of our entry points for trades off of a convergence of indicators in the same spot.
Today, we recommended a sell in [B]Eur/Usd[/B] at 1.3200. The basis for 1.3200 as the entry for our trade was a confluence of various indicators all by the same level, which would suggest that there will be some stiff resistance on rallies to the 1.3200 figure. A closer look at the daily chart shows a pending negative cross of the 20-Day SMA with the 100-Day SMA by 1.3200 along with the 61.8% retrace of the 1.3395-1.2885 move and the 38.2% retrace of the 1.3740-1.2885 move. Additionally, the projected daily “Average True Range” (ATR) high comes in by 1.3200 (just shy) as well, which adds yet another layer of resistance by this level. Finally, figure resistance itself more often than not will spark some form of profit taking with many traders content on exiting their long positions at round numbers.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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