This is a video summary of the Live Forex Trading Room session on August 27, 2007.

Today’s Summary:

Slow day today. British markets closed due to holidays there, so not much movement in the London session. Even during the late Asian session and the New York session, the currencies were in the formation stages, with not much fundamental data out today.

Lets take a look at one currency which we have been following, and the procedure which we generally use - a top-down approach, in which we break the market down into smaller timeframes and ascertain our trade levels.

EUR/AUD. Looking at the 4 hour charts, we can see that the pair has broken a longish trendline, with an expected Short longterm view. However, before it starts going in that direction, we always expect that when the price breaks a long trendline, it should come back up, and retest the trendline. Pullbacks is what we usually look for. They give you the confirmation and the safest entries. If you take this into consideration, and break down into a smaller timeframe, we end up looking for Longs, because we want the price to come back to retest the trendline. Which is exactly what we ended up doing today.

Looking at the 15 minute charts, we see a very prominent gap having formed at the week’s start. Along with the testing of the trendline, the price should come to fill this gap. This is a natural phenomena, and we do expect Longs in this period. The correct entry for the Longs becomes important, and we need triggers to get perfect entries.

Our proprietary indicators come to the rescue - Daily Pivots and Daily Momentum Value.

The “Rule of Thumb” for pivots:

• If you are looking for Longs, wait for price to come down and find support at a pivot level (which it did, for quite some time).
• The safest entry for a pivot trade is the break of a trendline (we had a downwards trendline broken, which gave an entry).
• If price bounces off a pivot level, the next target is the pivot TWO pivot levels above, which in our case matched the gap AND the long term trendline.

So all in all, it was a slow and steady trade, and is well on its way. We are still expeting price to go up to the pivot level, and tomorrow we will be using the same system to look for shorts - break it down into smaller timeframes, use our proprietary indicators, and plan a successful entry. As we can see, the price is still rallying up, and we are waiting to close when it reaches the pivots and the gap.

Enjoy the video and see you next time at our Live Forex Trading Room!

Click here to view higher quality versions of our past Live Trading Room summaries on our forums.

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