The Euro Tanks – Driving Price Action Signals Into Profit

The Euro finished off this week’s trading pretty bad. Most Euro pairs seen a massive drop on the back of the ECB hinting to more stimulus. Despite the reason, the price action setups were there prior to the move to get us into the moves early…

EURUSD

We spoke about the EURUSD earlier on, at this point in time the market presented a nice clean bearish price action setup.

A ‘thick body’ bearish rejection candle showing clear rejection of a weekly swing level – nice communication from the candlesticks that lower prices should be expected.

Unfortunately the EURUSD didn’t play ball with us this time, there was a bit more noise that occurred before the expected move.

One of the reasons I don’t like to trade the EURUSD very much is because it is actually a very noisy market and doesn’t produce as nice price moves as the other currency pairs.

The bearish rejection candle sell signal here did eventually see a sell off – but depending on your stop loss strategy, you could have been taken out before the move kicked off. This is because the highs of the rejection candle were breached before the sell off occurred and is generally where most stops will be.

The tin foil hatters would call this a ‘stop hunt run’.

EURAUD Range Trade

One of my favourite currency pairs, the EURAUD cross pair, produced a nice classic range setup…

Pretty straight forward. In our commentary we pointed out a reversal candlestick pattern – the bearish rejection candle, located at at the top of the range resistance.

The range movements have been pretty clean, nice bounces from the top and bottom boundaries. With a bearish price action signal like this at the top of the range, we can anticipate another cycle of the range and a retest of the range bottom.

This setup produced a very good response – actually you can’t really get much better than this, entering a trade and walking away with 300 pips in the positive at the end of the session.

Those who got short here off this move should consider taking profits while the market is testing range support and good risk/return is available. For those traders who think this range may break next week could hold on with the intention of a longer term trade.

EURNZD SWING TRADE

The EURNZD also produced a nice trade setup prior to the Euro drop – this is also one of my favorite markets to trade because of the nice moves it can produce.

This chart featured as our ‘chart of the day’ in the War Room

Basically the market was jammed inside a tight range this month, but recently experienced a breakout to the downside. Whenever this occurs we wait for a re-test of the old support/resistance containment line and wait for a price action to confirm that level is going to hold.

In this case, price broke the range bottom into lower prices – so our strategy is to wait for the market to test the range support again and confirm it is holding as new resistance. Price action signals that form in this fashion can produce very nice moves…

This breakout and retest type rejection candle swing trade produced very nice results here also.

The EURNZD market is now very extended from the mean value, so it’s might be worth considering collecting profits before any mean reversions occur.

But this is a nice demonstration of how powerful price action signals can be. They are so simple, but yet so effective at forecasting price movements like this 300 pip move.

EURGBP Indecision Breakout

The EURGBP has also been stuck in range bound conditions and retested the range top this week.

This chart also featured in our ‘chart of the day’ commentary in the War Room this week, which I would like to share in this post.

The range top was tested, and as price stalled and churned at the range resistance an Indecision Doji signal candlestick signal formed.

The body of the candle had a bearish close to it, which is a plus when you’re looking for bearish breakouts.

Out breakout triggered here as the market broke below the Indecision candle lows.

I believe this chart still has plenty to move down as the range goes to complete another oscillation. Looking to collect profits at the range support.

WAITING TO SHORT EURCAD

The EURCAD daily chart is one market I will be watching next week.

Price has broken below and closed below a strong support level which has been containing price for the last few months. This is the kind of situation where you target ‘breakout and re-test’ trade setups.

Any sell signals that form off the old support as it holds as new resistance have the potential to produce a nice move, so keep an eye on this one.

Well what more can I say, price action works, it’s powerful and very easy to learn. I’ve shown you the before and after shots of how explosive these price action setups can be.

If you want to become a master chart reader, and learn how to identify and trade setups like these ones shown today – using nothing but a plain price chart, check out the War Room Trader Membership. We talk about this kind of stuff every day in the War Room and many of us have enjoyed the profits this week’s signals have produced.

I hope to see you in there. Until next time – best of luck with your trading future.

If you managed to catch any of these moves, I would love to hear about it in the comments below.