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The wait might be over in the EUR/USD Forex market. Forex traders have been hanging around wanting to see what the market was going to do around the 1.27 support line and now we pretty much know. It has gone below it. It didn't crash through it like gangbusters (assuming anyone uses the term “gangbusters” anymore), and it wasn't as if the floor dropped out and the market went into free fall. It crept below the line and is now bouncing its head on it, but nevertheless moving downward.
There are some fundamental theories as to why this is happening. One of them being there was some German banking news that was to have had an effect on the Forex market, but the news turned out rather insignificant. Whatever the case may be, if there are any Forex traders who are hanging on to any long positions not believing the support line is now the resistance line, it might be time to hitch up your boots and admit that you're wrong (assuming anyone still “hitches up their boots” anymore).
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Many Forex traders were looking for this to happen. They want to be able to test the next level of support, probably around the neighborhood of 1.25 in the EUR/USD. So, it might be that time to switch your bull hat into your bear hat and trade the short side of this Forex pair for a while. You don't necessarily have to scalp it, because it looks to be for at least a short term, a trend exists.
If you want to pyramid your trades, keep in mind that you will definitely want to keep moving your stop-loss in the direction of the market. This kind of trend can turn at any given moment and you don't want to be left scratching your head saying, “Whoa! I didn't see that coming.” Because there are no definitive indicators, now is the time to protect profits and take your pips when you can.
If you trade Forex smart in this kind of climate, there's plenty of money to be made by taking a few pips here and a few pips there (here a pip...there a pip...anyway...). Don't look for any massive movement on any particular day for a while, and as a matter of fact, you might want to look at the four hour chart as opposed to the daily chart until you see some more movement in the market. Scalping this kind of market can still be tricky, but on the four hour chart you can pick some entry and exit spots that could be profitable.
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Hopefully, if you did get caught long in this market, it didn't hurt too badly because at least there were no big swings. It's a creeping Forex market, so it is making it easy for Forex traders to change his mind and position accordingly.
If you're one of the many Forex traders who insists on waiting until the next support level to be reached so you can take a long position, don't fret (assuming anyone uses the term “fret” anymore). You might not have long to wait. It looks like it is headed in that direction soon. You might want to put your buy order in now to avoid the rush.
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