One thing i look at pretty closely in order to determine the direction to trade in is whether the 5 is above or below the 15 day MA. When this is not the case, it is best to keep positions smaller than usual as their is a greater risk involved with achieving success. When the MA’s are supportive of the direction it is best to use a buy on dips (sell on rallies) approach combined with looking buy/sell breaks.
The EUR/USD just so happens to have seen the 5 cross above the 15 day MA, and those of you interested in history, this is the first time this has happened since the break below 1.3800, back in early Jan. I am not saying this is the ONLY factor you should be basing a trade decision on, but it should determine which side you play from, we then have to use a bit of market knowledge and technical analysis skills and look for the appropriate levels to get in relative to our stop loss placement.
For now, the 1.2880/00 region is the important level for the EUR/USD on the topside, with a break above this level likely to yield a move to 1.3100, a break of which opens the way for a move back to the imporant 1.3400 level. I now expect to see support ahead of the 1.2700 level and as such would be looking to buy on dips to 1.2750 and again at 1.2700 with a stop below 1.2600 which we will raise once we take out 1.2900.
