However, don't beat yourself up if you didn't get in. Remember, taking no trade is better than jumping into a bad trade for bad reasons. Anyhow let's move on to the trading outlook for tonight.
Let's start by determining whether we want to look for a long or short...or both.
Tonight's chart presents a few problems in our effort to find a trade. Let's look at a few of them.
First of all, we are in "no man's land" from the stand point of looking for a short. There aren't many indicators in this price zone, at least not indicators we look at.
There is, however, some short term reasons to look for a short based on the MACD of the 4 hour chart. But, that's not much to base your trading on.
Then again, in the spirit of fairness and in our effort to teach you as much as possible in these newsletters, there is a "make-shift" resistance level at around 1.8880. You'll need a bunch of additional reasons to go short there, so look for quality price action (e.g.: Candlestick formation) to help gauge whether or not you should look to enter a trade around there.
In case that doesn't give you enough to look for around that price, here's more. I wouldn't be too surprised to see Cable break above 1.8880 and then run all the way back up to near 1.9000 since there isn't much resistance in those 120 pips above the level (1.8880).
How in the world are you supposed to use this information to trade? Well, here is just a simple idea. IF you are trading Cable when price reaches this area, pay close attention to the price activity. Look for patterns like double tops or candlestick formations to help you determine if the level is holding as resistance.
If, on the other hand, Cable breaks through relatively easily, maybe it's best to wait for a pullback in conjunction with price activity and look for a long.
This is a more advanced trading setup since both a long and a short trade COULD be in order at this price level. If you are unsure what to do, DO NOTHING! You should only trade at your comfort level. As far as a support level goes. We're going to keep watching the mid 1.8700's again. Let's just remember that we have seen few legs of a downtrend over the past few days on an hourly chart.
If that pattern continues we could see a lower low than the one that was just formed. For those of you who wan to play it very conservatively, you might now want to look to go long.
Remember, decide what makes the most sense to you. It makes no sense to mimic others trading styles, since their risk tolerance and necessity for profit can vary greatly from yours.
I am sure that you can clearly see how valuable it would be to develop your own independent trading style. Take the steps to get yourself on the right track.
This week, however, we have caught the entire range of Monday's trading, Netting us 40 pips on one trade and 100 pips on another.
Using the same trading levels we got long last night, and again netter 140 total pips.
Although there were some great reasons to go long during the pullback to 1.8850 at 8:00 pm EST, we didn't take the long because we weren't in front of the screen. That's ok, no crying over spilled milk for us.
So, in the last two days there has been a total of a 160 pip range. We have grabbed 100 pips of it...YAY! Generally, the goal is 60% - 70% of the total move. So in this case we are right in that spread. Granted it's the lower part of the range, but we are thrilled.
Our goal, even with all of our trading experience, is 100 pips per week. In the "Trading In Black And White Forex Trading Course" we go over a very detailed compounding schedule and money management system that explains this in detail.
So, now on to tonight's trading.
Just like yesterday there is no clear cut resistance level to play. Also, just like yesterday we're going to point out that there is a "make-shift" resistance level to watch if you are in front of the screen when price gets there. This is....drum roll...1.9000.
Face it, even just looking at that number makes you jittery, nervous, excited, SOMETHING! Whole numbers have that affect on traders as well. We like to watch them for interesting trading activity. We discuss an entire trading strategy in the "Trading In Black And White Forex Trading Course" that revolves solely on big figures.
So, if you are around if and when we get to 1.9000, pay close attention to price action. You might be able to find a good short or a good long based on what happens at that level.
Again, like yesterday, beginners should not be looking to trade at a level that does not present a more clear picture of resistance.
As far as support goes, we will be watching a few different levels. Admittedly, we are conservative in our trading so you'll be able to guess which level we will be watching most closely in a minute.
On the other hand, many of our traders are more aggressive than we are so we'd like to share all of our thoughts with you.
1.8890, 1.8860, 1.8820, 1.7760 are all "valid" support levels. Obviously, you have to be sure that you get good price action, especially at the higher levels.
We are going to keep an eye on the 1.8860 and below. That does not mean that 1.8890 is not a good trade. We have found a trading style that works for us, and we stay true to it. So far, out of all the styles we have tried with the FOREX, this has been the most consistent and profitable one.
You should take the time to learn how to develop YOUR OWN trading style. Too many so called Forex gurus teach you to mimic their trading styles. Well what good is that? What if their style no longer works, how are you going to adapt?
With the proper Forex trading education you'll be able to decipher any of their systems, and ultimately develop your own. Believe me, there is no better feeling than being an independent trader.
We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with our Elite Forex Trading Course or Forex Seminar.