EUR/USD 6 DECEMBER 2011

EUR/USD

Price rallied and gave us the bearish cs formation we were looking for, but after our trading session. Price continued to drop the 80-100 pips. We are now back at the 618 of ther AB swing.

FOR TODAY:

Price rallied but didn’t get to the BF786 which would have been ideal for our strategy. We are now back at the 618 which is a buy territory. Our strategy is to buy at the 618/786 of the AB swing, If we do get a clear bullish cs formation at the current level which is the 618 then it will be considered a DD entry, else lower down at the 786 would be the next support to buy into after bullish cs formations.

But after the rally yesterday and the fall overnight we are reluctant to trade a long entry at current levels, since failure last night tells us that we might be heading back down.  If we get a clear bullish cs formation, try to place stop at cost asap, sell a bearish cs formation.

SHORT: WILL ONLY BE GOING SHORT IF:

We get a rally and then a bearish cs formation for a short entry today.  The limit for this entry will be 80-100 pips. Stop above the cs formation, max 1.5% risk. If price rallies to the BF786 and then gives us a bearish cs formation, the limit will be at the 786 since we would have had a 618 prior bounce.

If we don’t get the cs formations we are looking for then we don’t trade.

LONG: WILL ONLY BE GOING LONG TODAY IF:

We get a clear bullish cs formation at the 618, this will be a DD entry – good for 100 pips, it shows that the fib is holding, or lower down at the 786. Trade the 618 for 100 pips and the 786 will be ST to the BF786. Stops below the low of the cs formation, max 1.5% risk.

For Position traders – The long trade is still open but not looking to convincing right now, yesterdays failure tells us that we are likely heading back down to the A low of this swing. We can still add to this position if we get entries mentioned above, all limiting out at the 618 higher up – 3851, unless we reverse on this timeframe before we hit the 618. Stop for entry is at zero already. 

The bearish cs formation after the rally yesterday was most likely the sign that we heading deeper into the AB swing, if not reversing on this timeframe.

If we don’t get the cs formations we are looking for then we don’t trade.