As mentioned earlier in this article, before attempting to trade the EUR USD, the trader must decide whether to follow the trend or create a system based on support/resistance.
Analyzing EUR USD Using Pattern, Price and Time
Summary (Part III)
As mentioned earlier in this article, before attempting to trade the EUR USD, the trader must decide whether to follow the trend or create a system based on support/resistance. Studying patterns and price action of the EUR USD will help the trader make this decision. Knowing various ways to determine time will assist the trader in determining when and how long a trend may last. (Fig. 10)
Step One: Determine if the EUR USD is a Trending or Non-Trending Market.
The second key step to determine before trading the EUR USD is to establish entry rules. Once again pattern analysis will help the trader learn the best way to enter a EUR USD trade. By analyzing previous EUR USD swing patterns, the trader may be able to determine if it is better to enter on a breakout or by using support/resistance points created by angles or retracement levels. (Fig. 11)
Step Two: Determine if the EUR USD Requires a Breakout Entry or Retracement Entry.
Finally, the EUR USD trader must have an exit strategy. This strategy should consist of a valid reason for the initial stop, the trailing stop and the exit order. Pattern helps determine when the trend changes and should be used to determine the initial stop. This stop may be under a swing bottom or under an angle for an uptrend for example. Percentage retracement prices could be used to determine a trailing stop. For example, the trader would need to know the retracement area so that the trailing stop can be placed beyond that point. All three elements of pattern, price and time can be used to determine an exit strategy. For the trend trader, the swing chart can be used to determine when the EUR USD is going to balance a previous move in terms of price and time. For the support and resistance trader, an angle, percentage retracement or old top and bottom can be used individually or in combination to determine an exit zone. (Fig. 12)
Step Three: Determine Which Exit Method Works the Best for the EUR USD.
