The outline by Eamonn said it all about the ECB decision today. If you have not read, it please do. CLICK HERE
I did a video yesterday outlining my technical “line in the sand” area for today’s stuff CLICK HERE. The 1.2660 level is the point of bullish above/bearish below.
Regarding trading the news:
1. RISK is HIGH. Not only is there the typical Market Risk, but there is increased Event Risk and Liquidity Risk. Not all markets are the same with regard to risk. This one of them. As a result, if risk is too high for you, do not trade until your risk threshold comes down. That can be after the comments come out and the Event Risk (and Liquidity Risk) comes back down. At that time, you will just be dealing with Market Risk which is the risk we deal with at all times the market is open. The best time to trade is when the picture is clear from a fundamental and a technical perspective.
2. Buying a stack of Lottery Tickets is not the way to fame and fortune. If you must “have a punt”, it does not make sense to “bet it all on Red”. Sure you may win this time, but over time you are going lose it all and then some. Keep the lottery ticket buys to a minimum (i..e., don’t go all in from a ground zero). Do a small portion of what you normally do, if you must.
3. Know the technical levels. In the video, I talk to the 1.2660 level. This is the low from November 2012 and is also near the 100 hour MA. In Asian trading the EURUSD made it above this level but traders soon sold it back off. Currently we are at 1.2633. Which is closer to the level than I thought we would be at this time (I would have guessed we would be more toward 1.2600 but….) Anyway,it does not decrease the levels importance for me. The daily chart outlines the following levels
Meanwhile on the hourly chart, the arrows up (green) and arrows down (red) outline the technical targets. If we move above or below a level, look for that level to switch from resistance to support (if going up) or from Support to resistance (if going down). Often times a level will be broken and then the price comes back to that level for a test. If the test holds, that solidifies the level “as important” for the day. Watch for these clues. They become RISK defining areas.
4. LISTEN to what he says and to the market. Overall, I think the EURUSD bias should still be down from fundamental and technical perspective but that does not mean we don’t rally. I have been wrong many times before. Listen for comments about the currency and then “listen” to the market reaction. You should see a reaction lower and should see the closest level of resistance then hold. If it does not, the market may have exhausted itself for the time being. Listen to comments. Listen to the market.
Good fortune with your trading.
