EURUSD Analysis Part 3a - DAILY CHART

Once I have completed my top-down analysis (Monthly and Weekly), I have now moved to the daily chart to look for trade opportunities.

The first thing I did on the daily chart was to highlight the last five trading days representing the latest weekly of trading, as shown on the Weekly chart as a reference point. I have identified this previous week of trading with an M, T, W, TH, F for each day of the week.

The next day following the candle marked with an "F" was Monday the beginning of a new week. Here I recognize this candle to be a Doji candle. A Doji candle identifies market indecision. If the next candle closes above the high of the Doji, it will signal the market is ready to move higher, or if the next candle closes below the low of the Doji, it will indicate the market is continuing lower.

The last candle shown on the chart is known as a "Pin Bar" or more appropriately a "Pin Candle" since the chart is a candle chart and not a bar chart. A Pin Candle signals a reversal in trend.

In conclusion, the last candle shown is a Pin Candle, so I am expecting the market to move in an upward trend in the days ahead. Since the significant trend is downward, and I am expecting the market to start moving in an upward trend, the upward trend would be considered a counter-trend since it runs contrary to the major or primary trend.

Here is what I think about trading counter-trends: I'm not particularly eager to trade counter-trends because they are unpredictable and, therefore, riskier. They are unpredictable because they can either trend higher or move in a sideways direction. They are riskier in at least three ways: 1. If the counter-trend doesn't move high enough, the profit made may not be sufficient to cover the cost associated with placing and closing the trade, 2. If the market moves sideways, the trade will most likely end up with a loss, 3. Counter-trends take time to complete, and the small profit potential is usually not worth the time involved. Instead, I prefer to look for a different currency pair to trade that is in a major trend direction as the direction of the trend is more reliable, and the profit potential is much higher.