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Finding Tops is Fun

Our trade didn’t come until after the US markets got going. Over the course of the night, price action stayed in a pretty tight range. Price started at the pivot level and only climbed up to resistance one. The interesting thing was, it did turn on the line in true trading fashion. You could’ve traded a put option at resistance one and two call options at the 1.3742 level as well. Another put option near resistance one was a great looking trade. This was the trade we took and it worked really well at Redwood options. From the moment we started watching the markets, we noticed price was starting to consolidate. We didn’t see much movement, so we hung tight and waited for our moment.
As price finally broke out of this tiny channel, we started looking for a put option at resistance one. This was also the high of the day from earlier in the morning. We were a little slow to get our trading platform going, and we almost missed the trade. As price climbed up, we got in on the downward move. Although we did get in a little late, we did have a nice three Pip winner in the end. Price did test our entry level, but never retested the highs of the day. Price action then proceeded to drop off heavily to the south side, almost to support level one. News events will cause this type of price action to occur and you should always be ready for fast market conditions.

In the chart below you can see how price action formed that tight channel between the pivot and resistance one. Notice the three trade we talked about above and the the green arrow which was our trade of the day. Price climbed up to make new highs and on the wick, we got in on a put option at Redwood options. Price action did falloff and eventually made a significant move through pivot. Any news traders out there did pretty well without much resistance on the way down. Notice how price action has turned around again and is now trying to test the highs. Price definitely wants to make its way up to the 1.3800 level. Although news might not be favorable for the euro, the US dollar is just too weak to hold its gains. Any time price moves in its favor, it tends to turn around and go the other way. We are starting to form several wicks here and if we do get above resistance one, we should see the 1.3800 level by the end of the day or by tomorrow. We are not going to predict this movement, but this an area where we think it will go. Our trading lines held pretty well over the course the night, but over the past couple of hours, price has been too strong in one direction or the other.
Trade Nice Moves
We talk about taking clean setups and today was a fairly clean setup. If you’re having a hard time finding these types of setups, please make sure you understand what the markets may or may not do at that particular time. If you’re not too sure what is going on, please make sure you don’t risk any real money and sit back and watch. Without the right knowledge you could lose a fortune, so we want to make sure you do well and at least give it a fight. Over the next month or so, we will be working with other brokers as well, and possibly bringing in some other assets. We’ll keep you posted on all the changes that may occur.
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