Today I would like to share that when the bigger moving averages like in this case the 200 (purple) and 55 (blue) are relatively flat on the chart that one might not expect the market to be in a trending mode.
When the market is trending one should buy or sell in direction of the trend buying dips and selling rallies and trail the stop.
If the market on the other hand is not trending then one should pay more attention to support and resistance levels which will be more difficult to be broken.
So when I opened my chart I placed my support and resistance areas or zones on the chart and saw that asia took the eurusd currency down.
What I can recommend is that when price after a down move starts to consolidate and then moves up that a Fib should be placed on the chart like exemplified on this eurusd 5 min chart.
An area of the upmove where price held was the 61.8% Fib level. It is here that we might expect many bears to enter that want to sell expensive having had the patience to wait for the retracement.
One could have had therefore a relative tight stop and a nice profit target. The other Fib levels of 38% and 50% were easily broken so that one would not have shorted from there.
If your risk reward ratio is good then I can recommend to take the trade.
Best of PIPS