Many traders will tell you that to get the most profitable trades, you need to do a lot of price analysis – one currency’s price versus another currency’s price. However, many beginners lose track of how to do this and end up with bad trades and losing money.
Here’s what you need to know about Euro price analysis: First, you need to know what you are looking for. Most beginners focus only on currency pairs that they think are profitable. You don’t want to blindly follow trends, because even though you may think you can make some good money, there’s a chance it won’t turn out as you hoped.
Now, you need to decide what your parameters are going to be. If you just buy a currency pair that has a lot of support, you’ll probably get ripped off. In the same way, if you buy the currency that has the strongest resistance and try to ride it, you’ll probably lose money.
One of the best ways to tell whether a pair is worth buying or not is to look at its support and resistance levels. For example, if you look at a currency pair like the US Dollar and EUR/USD, you’ll see that the currency has support on the right side of the color bar, and resistance in the center.
If you put a dollar sign on the support level, you’ll get pushed up toward it. If you put the EUR/USD on a green color bar, you’ll be looking for a resistance level, which you can find in the bottom left.
To find a support level, you need to look at the resistance. You can’t break out of the support. If you find that a pair has support and it moves up, it’s probably a good idea to wait and find a longer-termsupport.
What is a good method to use when you’re looking for resistance levels? One of the more common methods used by traders is to watch a pair for two weeks and then look for a low of four pips (the US Dollar price) and a support of eight pips.
When you find this support level, you want to stay away from the pair until the next breakout. If you jump in too soon, you risk taking a loss. At four pips, a trend is clearly visible.
You can take advantage of the same support and resistance level to your advantage when you’re trading the Euro. Sometimes you’ll find that support is set at around ten pips, but as you’re learning, this is only one example. Keep looking for support and resistance levels and you will find plenty of them in the Euro price chart.
Here’s the one thing you must understand. Trading currencies isn’t a mathematical formula that you can use in Excel to make trading money, although there are tools that are designed to help you do this.
There are no perfect tools that can give you the real picture and help you figure out what is going on. While they are great to use in helping you find support and resistance levels, you still need to use them correctly to find these levels. If you learn how to use them correctly, you can make very good money from currency trading.
Here’s an easy way to use one of these tools that’s based on price movements to help you get a feel for how the Euro price chart looks like. This is usually referred to as ‘spotting the trend’.