EUR/USD Daily Update, Fri 04, March 2011
Good morning,
Our yesterday's trading plan has worked out well, and personally I prefer not to have any positions during important macro data release, especially intraday.
But if you're day trader and have entered into position in the beginning of the week - you may hold it, just tight stops.
So, what we can do today? If you still intend to trade, here is what I think:
On daily time frame market has hit monthly pivot resistance 1 and yesterdays intraday target - 1.3975. So it stands at resistance. But it's not overbought. The next daily target is 1.4033 - 0.618 from large ABC move. Trend is bullish.
Now we can't count on solid down retracement on daily time frame, because market neither hit any target yet, nor overbought. So, if want to open a possition we have to look at intraday time frame.
4-hour chart.
Trend is bullish. Look at 1.3880-1.3888 area. This is 4-hour K-support, and weekly pivot resistance 1 (1.3878). Just below the market 1.3856 - previous highs and b/e point of 4-hour trend + trend line support.
1.3830 area - is a 5/8 Fib support + low of this strong uside bar. The trading plan assumes entering from 1.3880-1.3890 area with stop below 1.3830, target - 1.618 from large ABC - 1.3992-1.40 area.
The reasons are as follows - risk/reward - OK, if market will break 1.3830 area it will lead to: shifting 4-hour trend to bearish, moving below previous highs, erasing of strong upside bar and breakout of trend support. That's why placing stop here is absolutely logical. At the same time, this combination allows as to not risk much today.
But again - I prefer not to have any positions during NFP release...