There are people who would say nay, I don´t need anyone´s help when it comes to trading forex, I´ve mastered my trading strategy and I´ve been profitable for this long. Well, you might not need someone to lend you a helping hand, but you sure need indicators to show you the possible upcoming trend or price direction. Your forex strategy relies on economic indicators after all.
To me these indicators usually are, moving averages, support and resistance levels, trend lines, candlestick formations, price action, market sentiment and a couple more. So, let´s have a look at the forex charts and see where we can find some help for possible trade setups.
EUR/USD – After the terrible miss in the US non-manufacturing data yesterday, the Buck was quickly being offered in the forex market and at the end of the day it ended up more than 100 pips lower against most forex majors, which has changed the support and resistance levels we have been counting on this week.
So, where are these new levels located today? The first resistance level has been formed out of nothing and stands at 1.1250-60. That´s where the 100 moving average stands on the weekly chart. Remember, the last time the price closed above this moving average was more than two years ago. Above that comes 1.13, and the big resistance level at 1.14.
Will the price push the 100 MA higher or will the 100 MA push the price lower?
The first support level is provided by the 20 moving average on the hourly forex chart at 1.1190-1.1200, which is holding the price up right now. Below there comes 1.1140 which has been the low in the last couple of days and 1.11.
GBP/USD – This forex pair has made some even bigger gains, partly due to the surprising good economic data from the UK and partly due to the disappointing economic data we have seen in the last couple of weeks from the US. So, the first resistance level comes at 1.3440-50, then 1.35 comes into play, 1.3520 and 1.35 50.
The support has been moving higher also and unless there´s a huge miss in the manufacturing and the industrial production numbers which are due to be released in less than an hour, then it´s unlikely we´ll see those support levels again. So, the new levels come at 1.3375, 1.3340s and 1.33.