EURUSD Top Down Analysis

Trading Discussion
#1

If you would trade EU, or any other pair for that matter, for consistently good trading results, you would do well by taking a top down approach. This is how I trade as a short-term swing trader but overall it will keep you from making a lot of trade losses. As I trade on the 4-hourly time frame (TF), my top down analysis begins with the weekly TF through the daily and then the 4-hourly. I will use this thread to discuss my top down analysis on EURUSD and other pairs on my watch list, attaching the relevant charts on at least a twice-weekly basis because I am a part-time trader. Any member who has a similar approach is welcome to contribute. I trade turning points (e.g. Pivots, S/R zones and Fib levels) with three EMAs (10, 20 and 50) and RSI.

Here below are the current EU charts: weekly, 4H and daily. In summary, with the rejection candle formed on last week’s weekly TF, as a short-term swing trader the sentiment will be to be bearish; considering trade entry after a retest of the immediate resistance zones (particularly daily S/R, weekly pivot and monthly pivot).

EURUSD_Weekly_May17,_2016.jpg700×276 26.8 KB

EURUSD_4H_May_17,_2016.jpg700×270 25.4 KB

EURUSD_Daily_May_17,_2016.jpg700×277 30.7 KB

3 Likes
#2

So where were you filled? Where’s your stop / limit?

#3

I presented the top down charts to demonstrate the approach and link it with how I trap the market. Before those charts were presented I had been on the trade and the trade is still on. I normally hold my trade for at least 6 hours depending on my take profit target or market conditions. I was trading the EU, which is still on, using a different account as I have three micro accounts. Usually, I don’t discuss my exact trade results but may talk about lessons learnt from losses or profits. Good trade to you.

#4

EURUSD bearish tone is still potentially strong. All the HTFs - 4-hourly, daily, weekly and monthly - favour the bears. At the moment, the price action is at a 4-HR S/R area which it will easily shake for its southward move as there is no immediate significant barrier on the way; the daily pivot, weekly pivot and monthly pivot are all far to the north. So any retracement would not likely be to any extreme unless there are fundamentals (e.g. EUR and USD data releases later today) that may ruffle the current technical disposition. As I have been in a short trade position on the EU for a while, my interest will be to see how farther south the move will be to favour my take profit target.

Attached are the top-down charts. Enjoy your trade.

EURUSD_Weekly_Top_Down_May_18,_2016.jpg700×263 22.7 KB

EURUSD_Daily_Top_Down_May_18,_2016.jpg700×268 28.2 KB

EURUSD_4-HR_Top_Down_May_18,_2016.jpg700×257 25.2 KB

#5

[B][U]Tip:[/U][/B]
Don’t get into the market just because there is an ongoing strong trend. Wait for a pullback or a trend continuation trade setup. If this does not happen, stay out of the market.

#6

I have expanded the scope of this thread to cover other pairs on my watch list. This will help me be efficient with my time and give members a variety of pairs they may me interested in. As usual members’ opinions and contributions will be appreciated. Today, I want to cover the AUDUSD pair. I have been trading this pair for a while and I like the fact that it respects technical indicators, e.g. MAs, and is fairly predictable. Yesterday, I closed a sell trade on this pair because I wanted to reduce the number of my open trades. I am still bearish on the pair, as a short-term swing trader. The trend on the HTFs I use - 4 hourly, daily and weekly - and the RSI readings are aligned with a further southward push for the pair. The shooting star formed on Tuesday on the daily chart was reinforced by a strong bearish candle yesterday. As the price action has just left the DPP, it will be good to wait for a pull back to around the DPP to enter a sell trade. Caveat: This analysis is presented for educational purpose and is the opinion of this analyst; it does not represent an investment advice. Good luck in your trade.

See charts attached.

AUDUSD_Weekly_Top_Down_Analysis_May_19,_2016.jpg700×292 29.7 KB

AUDUSD_Daily_Top_Down_Analysis_May_19,_2016.jpg700×274 31.8 KB

AUDUSD_4-Hr_Top_Down_Analysis_May_19,_2016.jpg700×275 26.5 KB

#7

The outlook on EU is still bearish. Any northern move is likely going to be a short correction to test the bearish spike around 1.1285-1.1289 on the 4-hour chart.

#9

Thanks for the useful tips, keep up the good work.

#10

I am still bearish on EU although there is room for correction northward to the immediate resistance on the 4-hour chart.

Last week, bears managed to push GBPAUD down from a significant resistance zone. Even though the 4-hour time frame indicates a disposition southwards, the outlook is still unclear on the daily chart, and both the weekly and monthly tfs tend to support a northward direction. Imo, the best action for a swing trader will be to wait for a clearer market disposition.

See GBPAUD weekly chart attached.

GBPAUD_Weekly_Top_Down_Outlook_May_22,_2016.jpg700×262 26.3 KB

#11

The overall GBPAUD market structure and context favors the bull. On the 4-hour tf, the bullish candles have been big and the corrective bearish candles have been very small for a long while. Much likely the bulls will still have their way this week. Trade safe.

#12

Hi TrapTheMarket, there’s a special section of the forum for analysis threads of this kind (which really don’t belong in “Forextown”): [B]301 Moved Permanently :wink:

#13

Hi, Lexys! I started the thread to focus on a top-down outlook on EURUSD and the pairs on my watch list. I want to use it discuss a top-down approach with members’ input/contributions. I don’t see the analysis I do as detailed enough to be under ‘The Analyst Arena’ unless the forum moderator feels otherwise. I want members’ views, particularly those who trade the pairs on my watch list or are short-term swing traders. Trade safe.

#14

Thanks csc. Good luck on your trades.

#15

If you want to successfully trap the market, your timing is key. Beyond price, timing is everything. You have to know when to wait and when to strike. If you enter a trade at the wrong time, you know the result may be detrimental to your account. To trap the market, S/R zones and other boundary-definition factors are important. However, it is very important to use the strong zone-definition factors or levels and know when to enter your trade. Trade safe.

#16

Do you analyse the market with a top-down approach? If so, share your view or analysis here. Although much of the focus is on EURUSD, any pair you want to use as an example of your approach will be accommodated. Good luck in your trade.

#17

I’m now preparing my charts for the week. My weekly outlook on the pairs on my watch-list is as follows:

Bearish: AU, EG, EJ, EU, NU
Bullish: GN, UC
Wait/Mixed: GU

I usually wait for the US open on Monday to confirm where change in disposition needs be effected. Trade safe, trade well.

#18

I love this quote from Mark Minervini as it speaks to the principle of top-down analysis and market trapping:

‘The less time I am in the market, the less risk I am taking.’ – Mark Minervini, a Market Wizard.

#19

[B]Tip:[/B] Focus on trading well, the money will come.

#20

[B]Tip:[/B] If you are going to trap the market successfully, watch price action at daily and weekly S/R zones, then use the significant signal candles that present themselves there for trade trigger.

#21

[B]Nuggets: [/B] Don’t use too many technical indicators or technical indicators that don’t perform complementary roles. Use a few (for me a max of 3) complementary technical indicators as part of a few significant confluence factors to track, stalk and trap the market/price action.