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Trade on a Weak Euro

It’s always nice to start your week with a winning trade. Today we got off on the right foot noticing the euro dollar getting pounded to the south side. Sometimes when price gets hit this hard it’s hard to find a solid entry in the same direction. Taking a call option at 24option in today’s market would have been very questionable unless the setup was perfect. We decided the best bet was to stick with the trend and look for a nice pullback after the moves we’ve seen go down.

Around 9:00 we saw a significant move to a new low and it was pretty extended. We then saw the price move back up into itself a good 20 pips. This level the price stopped at on the leg back up was also an area where an old support level became a new resistance level. We’ve been trading these a lot lately or price moves through certain areas and then uses it as an opposite area in the future. Since our trade was taken, price has been consolidating between the tops and bottoms of this latest move.

After entry we saw very little pain if any at all. Price moved in our favor about seven or eight pips closing well with in our range. Price soon after the expiry was over price moved back above that previous high but soon came back down to reach even newer lows within our expiry time. This is one of those cases where it is hard to take a call option because at any given point price could drop significantly against you.

The key here is to avoid getting into put options near lows or where price is set for a bounce. You want to try to avoid getting shellshocked when entering a call option on a down trending market or even better yet a put option at the low-end of the market.

The image below shows the trade that took place. As you can see there’s a significant red candles to the south side which then ended up consolidating for about five or 6 minutes. It then moved up back into that latest tiny consolidation area where we took our put option to the south side and worked out perfectly.

Trading on the Pullback

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