7/20 Analysis: When to Sit on the Sidelines
At the NY open, the EUR (pink line) is strong and turning up, however on the weak side we don’t have any currency to pair with it since there aren’t any that are diverging steeply away from the EUR at the moment.
In fact, 30-40 minutes into the session and conditions did not improve, therefore you would not have taken a breakout trade.
Because of this, I thought it would be a good day to discuss some other things you would look at that may help you stay out of the market when conditions aren’t favorable.
One of the things I do when the market is relatively flat is to look at the price charts to see how much each of these pairs is actually moving, in other words what is the size of the moves going on at the moment.
For instance if we look at the EUR/JPY, the average daily range for this pair over the last 6 months from high to low has been 154 pips.
Today, it’s only 50 pips which is a third of the normal activity. This tells you the market is unusually quiet today and the probabilities of getting into a profitable trade go down significantly.
This is just one additional piece of information you can use in conjunction with the currency strength indicator to determine if market conditions are favorable for trading.
You can watch the entire video analysis below:
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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