There's no denying that the EURO (6E H0) has been in a pretty vicious DOWN trend for the past few months. I know it was a big topic at the Trade Summit we had back in December, and if I remember correctly, two of our instructors were short the Euro at that time. I'm not sure if they are still short, but the opportunities to be so continue to present themselves. Until this thing can prove otherwise, we are wise to take advantage of its weakness!
You can see from the Daily chart below that we tried to establish some support at the MOB last week. However, as last week progressed, we fell below this MOB price, giving further credence to shorting behavior. Thus, the search for shorting opportunities continues.
Having this bias to the short side, we look for individual trades that help us in that direction. However, not wanting to take on the RISK of a trade on the Daily chart, I began looking on shorter time frames. I found a good setup on the 60-minute chart and began to examine the possibilities. I did get a bar that closed outside the Regression Trend Channels. However, the Reward/Risk was not as good as I wanted to see, barely 1-to-1.
SO, in an effort to still participate, as well as limit the risk involved, I went down to a 5-minute chart. On the 5 minute, we had a "loose" Type Two trade setup. I say loose because there really was not great divergence on that oscillator. However, the 60-minute was still a good setup. What I wound up doing was to make sure that the high was going to hold on the 5. I gave it another chance to break that high, so I waited until after it looked like the market was producing a Wave 2, and got in on selling behavior after that. You can see on the chart below that I have already take some profits on the trade, and am now looking to manage this on the 60, where the MOB sits down at 1.3839 or so.
This is an example of using time frames to support one another. While I am not a big proponent of advising people to look at vast time frames, if used properly, one can gain a good advantage in the realm of risk management. What I find from people who use multiple time frames is that they wind up getting more CONFUSED than anything else. We will try to rectify some of this at the up-coming Member event on Monday, February 8th. We will be discussing the use of multiple time frames, and will attempt to clear up the confusion. I look forward to seeing you all there.
Be Prepared!
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