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Monday Trading Before an Election

You always want to get off to a good start with your trading especially in the beginning of the week. Monday trading dictates what can happen for the rest the week. You can watch the markets all night and all day, but if you take the one trade that works in your favor, it can make the rest of your week that much better. This morning we were looking for a trade after price came down about 70 or 80 pips from the pivot line. Market momentum has been to the south side recently and will continue to be mixed until after the United States elections are over tomorrow.

The trade we took today was based on price action coming up from below support level two. We wanted to take a put option around this level giving us a nice trend trade on the EURUSD using the top platform by Price was floating up to support level two and extended past it just recently before the expiry was opened for trading. We noticed how price was consolidating a little bit and we entered our trade on a solid green candle on the Metatrader chart.

Within minutes price was against us by one or two pips before consolidating above our entry giving us quite a bit of pain for the duration of the trade. It’s not always great to have a trade go against you right out the gate, but if you’re confident with your trading idea there is no reason to panic at the beginning. Price will have a tendency to move against one’s ideas before moving in the direction of your choice. In this case, price was against us for about 9 minutes before moving in our favor on a jumper candle at the last minute. Price then closed by 1/10 of a PIP in our favor given us a winner for the trade today. Soon after price did move down further in our direction making our trade idea even more realistic.

The image below shows the trade that we took today at 24 option. Notice how price came up from below support level two and extended through it by a few pips. We entered our trade knowing that this area would consolidate or be a level of resistance. You can then see how price moves in our direction and then you can see how price made a nice solid move to the downside. Although most the significant move was after our trade was closed it gives us conviction that our trade was a nice set up. Anytime you can find a trade that works in your favor it’s a good thing, but knowing that you had the right idea in the end is what it’s all about. Since the close of this trade price continues to fall to that support level three area. Where it goes from here is not yet known.
Hanging Around Both Sides of the Support Level
Should we get down to the support level three area we will consider a call option reversal trade especially if there is an extended move. Price is below the level of the last few weeks and with an election coming up tomorrow, it should open up the doors for reversals. We will obviously keep an eye on the markets and trade what we see. Markets may consolidate tomorrow on election day, but be aware of any fast moving markets so you don’t get stock in a bad trade.
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