Currencies | Mar 01 2011
FNArena has added another video to its Investors Education section on the website.
In this video, ATW's Jerry Simmons offers another example of his "Bracket Trade" strategy as the market seems confused as to which direction euro and USD will move against each other. Total duration of this educational video is 30 minutes.
Summary
The Euro (EURUSD currency futures contract) is caught in a trading range about 500 pips wide at the extremes between two major DPTLs (Dual Purpose Trend Lines), i.e.
– 1.3750 – 1.3850 at the upper end and
– 1.3350 – 1.3450 at the lower end
– with a local (intra-day) DPTL at 1.3540 – 1.3570 in between.
This market indecision is even exacerbated by two conflicting H&S (Head and Shoulders) formations within that trading range, one pointing up; the other pointing down. The way to trade this “zone of indecision” is by a bracket trade, i.e. a buy stop above and a sell stop below the zone of indecision.
Comments
The 1.3350 – 1.3450 zone has been visited and re-visited by the market many times, enhancing its importance as a watershed and strategic support zone between a bullish and a bearish scenario for the Euro (EURUSD futures contract); the market visited this area in early 2010, in July/August 2010, in late 2010 and in early 2011 once again.
As long as the Euro is above the 1.3450 level, the scenario is bullish and the short and intermediate trends are up.
A confirmed break-out below 1.3350 would increase the odds for an extended move to the downside, most likely to the next key zone which is to be found at the 1.2900-1.3000 level, but we need to emphasise that this scenario is conditional on a confirmed B/O below 1.3350.
Within the overall consolidation zone, or sideways move, of the Euro (1.3350 – 1.3850) a local DPTL is forming at the 1.3540 -1.3570 zone, allowing us to focus the decision zone:
– A break-out above the local DPTL (1.3570) by 25 pips or more would increase the odds for a move up to the major DPTL at 1.3750-1.3850 and above
– A break-out below the local DPTL (1.3540) by 25 pips or more would increase the odds for a move down to the major DPTL at 1.3350-1.3450 and below.
On a fundamental level, the developing situation in the Middle East could lead to a “safe-haven” move which would favour the USD at the expense of the Euro.
To view the ATW Strategic Prep Video (originally from November 29, 2010) titled "ATW Strategic Prep Video 2011-02-22 “EURUSD”" click HERE or visit the FNArena Investors Education section of the website.
Here's the direct link: https://www.fnarena.com/index2.cfm?type=dsp_front_videos
All views expressed are Jerry Simmons's, not FNArena's (see our disclaimer).
Jerry Simmons has over 25 years of full-time trading experience. He is the senior partner and head mentor for the “Masters” Programme within the education system at New York based Advanced Trading Workshop (ATW). ATW recently set up shop in Australia through the establishment of ATW Australia (since mid-2010).
FNArena is pleased to have Jerry Simmons as a highly valued contributor to its service which aims at both educating investors and assisting them with their own market analyses.
About ATW Australia
Founded in June 2010, ATW Australia is a “one-stop-shop for all a trader needs to succeed”: quality education for new traders, superb advanced trading education, fast unfiltered data, a world-leading trading platform, customer oriented competitive brokerage, quality ‘Made in the USA’ specialized trading computers, trading magazines, and the all-important psychological mentoring and coaching for traders. The trading educational products are provided by the Advanced Trading Workshop, Inc. in New York, all other services are provided by a network of partners that were chosen based on their superior products and services in their specific field of expertise. FNArena is one such partner.
To learn more visit www.advancedtradingworkshop.com.au.
