EU summit deal sent EUR/USD 200 pips up this morning and there are already talks online whether the deal will ignite a rally or will eventually trap Euro investors. The Euro currency has been taking a beating for a year now falling from 1.45 to 1.23 US dollars. For some today’s (most probable) uprising candlestick will indicate further resistance to Euro’s decline and a potential trend reversal. Others and specifically those who are short on EUR/USD – count me in – will try keeping calm whilst offering a warm welcome to the investors. After all if the rally fails, today’s buyers will be the first to be selling Euros, adding more selling power and further increasing shorts’ profits. So, are you trading long or short after today’s European Union’s deal?
I won’t be trading Euro today or any other forex pair. Forex market is currently quite volatile and will most probably print interesting trading setups for day traders and swing traders. Those who have been caught by surprise after today’s surge are expected to either trade out or enter the market in delay. Since I am not going to spend the day in front of the monitor, I need to set loose stop losses; something I’m not that fond of.
In the meantime, it’s worth noting the support level at 1.2450 that is pinpointed in the daily forex chart. Certainly, that level can be used as a guide for your stop loss orders. But wouldn’t it be greater to have already entered the market yesterday night when the forex pair confirmed the support level for a third time? It’s no wonder that timing is paramount in forex trading and today’s EU summit deal is another example of forex news announced at key support or resistance levels!