Can anyone explain to me why the EURUSD downtrend stalled out today? I think it might be because at this point there is no precedent for it to go any lower. It hit 3300 because there are always orders waiting at even numbers, but in order for it to gain the proper momentum to continue lower, a retractment is necessary in order to give the current longs a place to set stop losses so that they can cascade and permit a new low. If so, it would seem that soon it is time to sell again. Does anyone know?
- Joined Mar 2007 | Status: Member | 8,618 Posts
Here is a chart:
The flag formation in a down trend is quite common and it's a safe trade if it's played properly. We can see 2 flags, A & B. They are similar. The safe trade off the flag is the lowest price, shown by (i) and (ii)
Rather than watch their profits disappear most traders will close these shorts at the end of day 1 or 2. This results in a retracement shown as bar 1 and 2. Bar 3 tells us it might be time to short again. In any case, lots of traders will be trading this retracement (not my thing), and reversing it at or near the line (ii).
The flag formation in a down trend is quite common and it's a safe trade if it's played properly. We can see 2 flags, A & B. They are similar. The safe trade off the flag is the lowest price, shown by (i) and (ii)
Rather than watch their profits disappear most traders will close these shorts at the end of day 1 or 2. This results in a retracement shown as bar 1 and 2. Bar 3 tells us it might be time to short again. In any case, lots of traders will be trading this retracement (not my thing), and reversing it at or near the line (ii).
Gone to a better place
- Joined Mar 2009 | Status: Getting closer to ...... | 1,787 Posts
The market rarely falls evenly. The reason for the last day's fall was taking out stops of buyers in the 1.35 to 1.36 area. Their stops would have been around 1.34. I had sell orders waiting there just for that reason. To put it simply, when a buy closes, it's a sell. Now we are floating at 1.33 to 1.34. The market will probably retrace to test 1.34. Like me, there will be a lot of sellers there.
