Fiber (EURUSD) 250816

How to trade this plan
1. Support and resistance zones shown in green and pink with arrows indicating direction. Bulls buy at support and bears sell at resistance.
2. Keep in mind that when price breaks through support the level will be tested in future as resistance – this is called role reversal.
3. Market direction indicated by 21 and 55. Take note of where the 21 is in relation to the 55 and where price is in relation to the 21. Also take note of the width between the two moving averages. If price is below the 21 you may consider looking for selling opportunities. If the 21 is dynamic resistance then if price falls from the 21 it predicts a lower low – the opposite applies when the 21 is dynamic support. If the 55 is dynamic resistance then if price falls from the 55 it predicts a double bottom – the opposite applies when the 55 is dynamic support.
4. Direction of price is indicated by 5 and 8 MA’s and stochastic cycles. Remember that when you line up higher and lower time frames, price is going in the same direction. The goal is to line up market and price while using support and resistance as your leading indicator.
5. Pay attention to reversal patterns on higher time frames when in a trending market – a reversal pattern could mean the end of a trend. Keep in mind that a reversal pattern that is not at support or resistance is meaningless.
6. Pay attention to reversal patterns on lower time frames when confirming your entry and if you want additional confirmation wait for a 5 8 cross on M5 or M1 before entering your trade. Remember – we enter on the second chance on the 5 minute chart.
7. I have added a summary under the H1 chart indicating observations and trade plan.

Note:
a. Please read Kate’s post on Forex Major Currencies Outlook everyday so you are up to date with the latest news. Here is today’s post: Forex Major Currencies Outlook (Aug 25, 2016)
b. Please be aware of risk events for the day by using the Forex.Today calendar
c. Watch Wayne’s webinar daily at 13:30 SAST or catch the recording on the Forex.Today Youtube Channel

EURUSD Daily

EURUSD H4

EURUSD H1

EURUSD continued to fall yesterday, breaking through support on H4 and H1 and is now returning to test previous support as resistance. While market is bullish on daily it's the double top reversal pattern on H4 followed by lower lows and lower highs that indicates a change in trend. The target for the week is WM1. We are currently at the 21 on H1. Should price fall from this point I will confirm entry on M5 with the target for the day being DS2. Should we break DPP then I will look for an opportunity to sell off DM3/ DR1 or between 50 and 61.8 fib and place my TP at the weekly target with my stop loss above the previous weekly pivot point.

6 thoughts on “Fiber (EURUSD) 250816”

  1. Hi ryan, nice post. i saw a reversal perttarn which is a green inverted hammer on M5 DPP LEVEL. is that a confirmation to sell?

    1. You would use the 5 minute chart as a confirmation of a trade you identified on a higher time frame. So if you identified resistance on H1, H4 or daily and you dropped into M5 you would be looking for confirmation of a sell. I like to wait for a lower low and then sell the lower high. Remember that reversal patterns and candle stick formations are only useful if they appear at support or resistance. Hope this helps!

      1. ok, but do i sell (execute) on the m5 or back on the higher time frame where i first identified the support or resistance?.

          1. Profile photo of Miles Miles says:

            Hi Ryan, we missed you at the webinar.
            Why not down to M1 chart? What’s you SL size in pips?