Let’s play the range
Skerdian Meta • 2 min read
Today is Monday and Mondays are usually dull, especially when there aren´t any important economic or political news. Today looks like one of those days, apart from the disappointing Japanese GDP numbers which sent USD/JPY 40 pips down among fears that the BOJ might reconsider the extension of the stimulus plan. On such days, most pairs trade in tight ranges that have been formed during the last 1-2 days of the previous week. So our plan for today is to trade the extremes of these ranges.
Last night we issued a GBP/USD sell signal near the top of this pair´s range and it hit take profit this morning. We plan on opening a buy signal in USD/JPY once this pair gets closer to the bottom of the range, near 118.35-40 where we can see the 200 moving average which has provided good support on Friday and today as well. Currently we have a live EUR/USD sell signal which we opened near the top of this pair´s range.
It feels safer to sell EUR/USD at the top, because it hasn´t been able to move above Thursday´s highs and on Friday it formed an inverse pin, which signals a reversal.
Another reason for selling EUR/USD is that the 20 exponential moving average on the daily chart is right at the top of the range. But like we said above, the forex pairs usually tend to move sideways on Mondays and the US is off today which will make the market even quieter. So we don´t expect any range breakout, that´s why we are planning to sell at the top and buy at the bottom of the range in the main pairs. If a breakout does occur which is unlikely, we´ll play the breakout on a retrace.