It’s always very important to perform an analysis BEFORE you start looking for trade opportunities.
Trading without an anlaysis would be like trying to get from place A to place B in an unknown city, without a roadmap… just following our gut feeling.
It doesn’t make sense does it?
Well, the same goes for currency pairs, if you do your analysis, then you can have your trading plan, you know what the market needs to do in order to start looking for trade opportunities…
Anyway… here is my trading plan for the EURUSD
EURUSD long term analysis
Its trading right in the middle of a possible range, but still, its trading at an important level, so it could go either way:
Hey, I’m no magician… but if we take a look at the short term chart, we’ll get an idea.
EURUSD short term analysis
It is trading in what I call The SF Box:
I refer to the SF Box when the market trades around an important long term S&R level, and in the short term the market is trading in a very clear range… just like the one above.
It helps me create my trading plan:
I will only trade the EURUSD once it breaks wither side of the range, it doesn’t mean however that I’m going to trade the breakouts… what it means is that once the market breaks either side of the range, I will start looking for trade opportunities, in the direction of the breakout.
- If it breaks the 1.3136 level for the upside, I’ll start looking for long opportunities
- If it breaks the 1.3036 level for the downside, I’ll start looking for short opportunities.
Why not trading a breakout?
There are two reasons.
- When the market is trading around the SF Box, we see plenty of false breakouts or fakeouts as some traders call them, and they transform in good range trading opportunities.
- The market, specially the EURUSD has been very volatile (the bad kind of volatility) in terms of breakout signals…
So I’d rather wait for a pullback to trade it…
What do you think about my EURUSD Analysis?
What do you prefer: trading breakouts or pullbacks?
Let me know in the comment section.