Good morning, Traders!
Last week was a volatile week in terms of swings in all directions. As we edge closer to the holiday season, the markets may become sleepy if trading volumes drop temporarily.
The weekly candle on several charts closed very bearishly, implying that further lows could be tested in equities, commodities, cryptos and even currencies if the USD strengthens as signalled.
Extra caution in trade and risk management should be applied here for all of the reasons above. That could mean lower risk percentage per trade, taking partial-profits along the way, or even closing out trades earlier than usual.
Most of all, do not take it personally if the markets become uncertain and begin to range more.
Here are my market picks for today:
EURUSD, Daily, bullish
The current Daily candle is bullish. As long as it closes nice and green today, this could provide a buy entry opportunity should the trend continue.
I will place my entry 2 pips above the high of this bullish candle, with my stoploss 2 pips below the low.
I plan to take partial profits at 1:1 and target 3:1 or the next major resistance level on the weekly timeframe.
Should the candle close red and bearishly, then this trade idea is invalidated.
As there is a lot of economic calendar news, I will reduce my risk for this trade to 0.5% or less.
Traders who take partial profits when price reaches 1:1 often enjoy fewer losses.
US100 (NSDQ), 4-hour, bearish
Should price action follow through on the heavily bearish weekly candle, then price will likely find resistance in this area today.
It has now retraced back up into that same level and is testing it for resistance.
I’m waiting for a bearish rejection candle in the moving averages and/or resistance levels.
Should a bearish candle be produced in this area, then my entry will be placed around the closed candle, 2 pips below the low, with my stoploss 2 pips above the high.
Again, with all of the high-impact news expected this week, my risk for this trade will be 0.5% or less, but not more.
Taking partial-profits at 1:1 is a great way to mitigate risk, as well as targeting a realistic price point, such as a major resistance level, or 1:3 risk-to-reward point.
Should no bearish candle form in this area, or should the daily close very bullishly, then this trade idea is invalidated.