Monday is often a difficult day for forex trading, usually because there is little fundamental news & everyone is still recovering from the weekend! However, this morning’s forex markets provided a refreshing change to the normal desultory trading not least because we have some important economic announcements in the US with the release of the monthly manufacturing data from the ISM. Even with Germany closed for a Bank Holiday, the continuing issues over Greece and their almost inevitable default continue to weigh heavily on the markets. Last Friday’s equity markets all ended badly and this was carried through into the Asian session with a consequent follow through into the European session.
It was against this background that my indicators flagged up a possible short eurusd scalp trade at 12.43, and based on using the 792 tick chart. 12.43 was, of course, just before the US futures open when many traders tend to opt out of trading this particular period. However, looking at my charts and the associated tick data I was happy to take this trade and entered the position at 1.3342. For the first 10 minutes the position went negative as the eurodollar recovered slightly to reach a high of 1.3354 before falling back to move below the open and move the position into positive territory.
Approximately 30 minutes later I was able to move my stop loss down to the 1.3342 level, making this a “riskless” trade with the market trading in the 1.3318 area where it remained for an extended period. During this extended consolidation we had several pivot points, coupled with a change in sentiment on volume and trend, clearly signalling that the move lower was beginning to run out of steam. As a result, and coupled with the fact that the US market was about to open I decided to close the position at 14.29, a minute before the opening bell for equities wit the eurodollar at 1.3321 for a total of 21 pips.
Since closing the position the eurodollar has continued to move sideways, refusing to fall below 1.3300 for the time being and I am now looking for other opportunities either to re-enter, possibly even to the long side, but will need to see a firm break and hold below the 1.3300.
We can take various lessons from this trade and these include:
1. Always be aware of session times for related markets, such as futures and equities.
2. Always try to convert positions into riskless trades as quickly as possible.
3. Always be aware of major support and resistance levels and the power of 00 and 05.
Good luck and good trading.