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Resistance Against the Trend

Today was one of those days where you looked for particular trade setups based on price action. We had watched the EURUSD move up nearly 70 pips in an hour with hardly any pullbacks on its way up. After flying through our resistance one point we were seeking our next trade set up potential around resistance two. Shortly after passing the first resistance area the price had moved up to resistance two. This is where we decided to take are put option. It was a bit risky at first considering the move we saw over the past hour, but it was definitely extended.

The price rose dramatically to the North Side and we entered our trade, which was a put option right at the resistance area. We got a decent fill at 24 option and never saw an ounce of pain on this particular trade. The picture below shows you exactly what we’re looking at and how it played out. When trading against the trend you need a significant catalyst to help this trade work out in your favor. In this case we saw the drastic move to the North side without much pullback. You can see how it clearly was in our favor by 12 pips.

Resistance Trading

It was a decent way to start the week with a put option on the euro USD. However we will continue to look for call options throughout the rest of the day. A lot of things are happening in the markets right now so finding an exact trend is still questionable. Don’t try to guess so much of which direction the price will go, but use your price action guides to figure out whether the price should move to the North or South side. Try to take put options on extended moves and call options on nice retracements. Don’t just enter trades to trade them, but have a good educated guess where the price should hold whether it’s support or resistance and then take your trade.

Risk Disclaimer

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