Update to EURUSD WE 31, Entry Triggered from a Bearish Engulfing Bar

If you have read the post here: Market Analysis for EURUSD WE March 31, you may have noticed that I left out a scenario where a breakout could fail. And as we speak, the breakout potential for EURUSD did not materialized, instead, we have a Bearish Engulfing Bar that can be traded since we are at a supply zone.

The trade was triggered when an engulfing candle formed. However, most engulfing candle may need confirmation, but I can still enter a trade with an initial position that is still within my risk of 1-2%. I initially entered a sell stop order for 4000 units (.04 lots) 15 points below the low of the engulfing candle marked with "A". Stop loss for initial position is marked with A1 and target is marked with A2. The distance from entry to stop is 110 pips, while the profit target is 128 pips.

Second position was triggered when a bar closed below the 50% of the green bar marked with "B". Added 3000 units (.03 lots) Stop loss is 90 pips marked with "B1" and profit target is 134 pips marked with "B2".

The timing of the trades would have been better if there were triggered on a Wednesday. Most traders will likely gear up for profit taking on Friday and some, early as Thursday. However, the way the market is moving, it will likely hit target A2.

These positions are going to be adjusted in conjunction with how the market behaves in the next 24 hours. I'll be updating this post til then.

Have a great day and good luck.

Market Analysis for EURUSD WE March 31

Before anything else, please read the Disclaimer.

It's been quite a rally for EUR since the beginning of March, but we are seeing some weakness as end of the month approaches. Is it time to buy the dips and sell the rally? Not so fast.

For EURUSD week ending March 31, I'm seeing 2 potential trades; a reversal trade, and breakout to the next demand zone.

The gray zones on the chart are supply and demand zones. The price at the moment is trading withing the demand zone. What I want to see a candle body that will pierce the 50% of the recent green candle, and that will be a trigger to execute a trade.

The current candle I'm interested in is the green candle marked with 'A". Again, this is the first big candle in a supply zone. The rally has weaken when no candle has ever traded above the price of candle 'A". But that is not enough indicator of weakness, there should be commitment from trader to go short.

Marked with "B' is 50% of the range of candle "A". Before any short is executed, a bearish candle's real body must trade below "B". Stop loss is placed above the recent highest price. However, this is just the initial position targeting 50% of another green candle marked with "B2".

Marked with "C" is the lowest price of candle "A". Another position is entered when a bearish candle's real body trades below "C". Stop loss is marked with C1 and targets "C2".

While the second possible trades will about breakout to the next supply zone.

Marked with "F" is a candle that is also the current supply zone. The wick of the candle means heavy buying and selling activities. As you may notice, this zone has been tested once, and being tested at the moment. The zone marked with "F" is technically acting as resistance zone. Any bullish candle body trading above the zone is a breakout candle and can be taken as a trade trigger. Though the tricky part of a breakout is the stop loss, since I may need to cover the entire zone's range which is, more or less, 120 pips. That is ok as long as I stick to my risk of 1-2% per trade. Initial target is marked with "F1", and depending on where the stop loss is, the target can also be at "F2".

These trades have yet to materialized and I'll be posting this as we progress, if in any case, it thus trigger a trade.