Trading in Black and White Forex Trading Newsletter - 05/16/2006

Trading in Black and White Forex Trading Newsletter - 05/16/2006

Ok, so be honest. How many of you thought we were crazy when you said that you look mid 1.8700 's. Well, I hope you caught the bottom of the move from yesterday and jumped on them for a ride.

However, do not beat yourself up if you do not get in. Remember, having no trade is better than jumping into a bad trade for bad reasons. In any case, let us move on to trading prospects for tonight.

Let's start by determining whether we want to look for long or short ... or both.

Tonight's scheme is a few problems in our attempt to find a trade. Let's look at a few of them.

First, we are in "no man's land" from the stand point of view for short. There are many indicators in this price band, at least not see the indicators.

There is, however, some short-term reasons to look for short based on MACD on the 4 hour chart. But it's not much to base your trading.

Then again, in the spirit of fair and in our effort to learn as much as possible in these newsletters, there is a "make shift" resistance level around 1.8880. You'll need a bunch more reasons to go short there, so look for quality price action (eg Candlestick formation) to help gauge whether or not you should look to enter a trade around there.

In case you do not give you enough to look around for that price, there is more. I would not be too surprised to see cable break above 1.8880 and then run all the way back to near 1.9000, because there is great resistance in these levels over 120 pips (1.8880).

How in the world you had to use this information to trade? Well, here's a simple idea. If you are trading cable, when the price reaches this area, pay close attention to price action. Look for patterns like double tops or candlestick formations to help determine if the level holds as resistance.

If, on the other hand, the cable passes relatively easily, perhaps it is best to wait for withdrawal on the activity and the price seems a long time.

This is an advanced trading setup since long and short trade may be in order at this price level. If you are not sure what to do, not doing anything! You just need to trade on your level of comfort.
As far as support level going. We will see in the middle 1,8700 's again. Let's just remember that we have seen a few feet of a downtrend over the past few days the hourly chart.

If this pattern continues we see a lower low than the one that was formed only. For those of you who wanted to play very conservatively, now you might want to look to go long.

Remember, decide what makes most sense for you. It makes no sense to mimic other trading styles, as their risk tolerance and the need for profit can be much different than yours.

I'm sure you can clearly see how valuable it will be to develop its own independent trading style. Take steps to get on track.