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EURUSD Trade Entry

Trade update at end of blog post

In this weeks Forex and cryptocurrency setups, I asked readers of the blog to comment how they would approach a trade entry in the EURUSD.


There were a few good answers but most of them used one approach to get into the trade.  What was nice to see was that each person had a well thought out reason for their entry that made good sense.

What I’ve tried to do with these free charts I post is to show that while there are many ways to look at a chart, only a small handful really have an edge.  In fact, you can read about an exchange with a former reader who criticized me looking for longs when “everyone” was looking to short.

That’s not to say I will always be right and I don’t care about being right.  Many times when a setups does not work out, it is a failure of the pattern which is something you can see as opposed to being way off the mark in terms of analysis.

A failure of a trading pattern, while not always a trade in the opposite direction, can give you valuable information about the market condition.

Everything I do in trading, I can reason.  I follow what I know and have quantified actually works in the market.

Let’s get back to the EURO.

One comment was by a reader named Sara and she was close:

A few way.
Failed test of lows on daily.
4 hr cht, break of triangle but prefer small range.
Strong close

What she was saying in those four lines was there are a few ways to find a trading entry.

So what happened?

Four Hour EURUSD

Once I saw price sitting around the highs on the daily chart, I went to the four hour chart to notice the price action.  The green arrow points to the entry which is shown by the tiny arrow.

  1. This is an inside resistance line that ignores the pivot high.  This is the zone I look to when zeroing in on how price is behaving near the highs for a long trade consideration.
  2. This is the high that most traders look at and play breaks of the highs or pullbacks.  I prefer to be positioned before the breakout
  3. This is the reason I like to be in a trade before price breaks.  If it is a true breakout, there should be some type of momentum and being already positioned before volatility sets in, cuts down on increased spreads and slippage.  You also gain profits quickly.

The bottom red line is my stop location at the point I set up the trade.  In this case, it just happens to be at the extreme of the range and under the higher range that occurred before the break.  I could have, in retrospect, used the higher range but I used an ATR stop placement for this trade setup.

Why Is This Entry Decent?

Price action and structure gave me an objective area to take a position.  Price basing under resistance is a bullish situation.  We also had higher lows leading into resistance which also sides with the bulls.

If price were to break and then pullback, that does not invalidate the trade nor the breakout.

What I don’t want to see is price to pullback with momentum or pullback, head back in the direction, and then put in a lower high.

Until then, I will stick to my usual trade management style, reduce my risk, and let a portion ride.

The point is:

  • Ensure you have a method to get into a trade
  • Understand, in advance, what you will use for a protective stop
  • Decide how you will determine if the trade is failing so you can either cut risk or exit the trade

All of those and more should be contained in your trading plan.  Failure to plan…….plan to fail.

UPDATE:  I was asked if I was still in this EURUSD long trade.  The answer is no.  My trailing stop was hit on Jan 29 @ 9:38 at the price of 1.2350.
Pip totals on 2 scale outs and trailing stop: 131 (1st scale), 183 (2nd scale), 52 (trailing stop)

6 thoughts on “EURUSD Trade Entry”

  1. Sir. I see you got taken out on aggressive stop location. I did the same thing after seeing the strong reversal candlestick. Will you renter another long position? Thank you
    Yes. I entered at 1.2480 on the with a buy stop order at the break of a four hour range high. I have moved the stop from below the range (away from the noise) from where I initially had the stop into a location where if the trade fails back inside, I will be out. I have cut my initial risk in half.

  2. Hi Sd,
    What do you use to for volatility measure to use on a trailing stop?
    I use ATR but will not ignore price action if it is showing strength against my position. In that case, I will use market structure.

  3. Hi SD,
    Please help me understand this. When you say you scale out what do you really mean and how do you scale out and use a trailing stop.
    I mean….I scale out. I take partial positions off at 1R, 2R and trail the remainder.

  4. Hi Sd, as part of your trade management style, at what point do you decide to reduce your risk and let a portion ride?
    Good question. It’s rules based. Scale at 1R, 2R….and use a volatility measure to trail the stop.

  5. Same here. even though, it’s drastically going down (now, it’s about 11:00pm Wed PST), I take this as a news influence and a typical pull back. I still see a bullish trend in this pair.
    It’s a pullback in an extended market that is occurring in the area of the measured move profit target from the daily range. Could be news…could be the natural evolution of price. I have had two scale outs at 1R and 2R. A position remains with a trailing stop.

    Yes, correct, on 17th on that support area, I took the first entry of this long trade.
    Buying support in an uptrend when using a failure test of lows is one of my favorite plays. They come in handy on lower time frames when a pullback is underway/coming to conclusion, on a higher time frame.

    I don’t know how it will impact this following EUR scheduled news.
    We never know. Too many different interests to be able to say if A happens, B happens. I use price. Period. 🙂

  6. Now, Eurusd is at 1.2408, still looking for a bullish.
    I don’t know what time frame you are trading but it will take a lot for me to take a bearish view of the EURUSD. That does not ignore mean reversion trades if the market sets one up.

    I’ve had 4 entries so far from 1.2190 with about 400 pips profits and I’m still let the profits run with only one stop loss of my 1st trade entry.
    Which looks like a failure test entry of support on the four hour chart on the 17th?

    I’m using one of your course “double your account with trend line 34 SMA”
    No harm in that. Breaking of trend lines show a change of state in the market and the 34 EMA gives you an area of value. As long as you understand what it all represents…good on you!

    looking for a turn to bearish trend to exit my every trades. other than that, I will still add more trades in this trend.
    As I said, I don’t see a daily chart trend change for a while. However, any hard slams against this trend is not something we want to see. Think of investigating using a trailing stop.

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