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Guest Commentary: Using Stops to Win not Lose!

Guest Commentary: Using Stops to Win not Lose!

Ed Matts,,

* Following a strong downtrend, it is typical for the market to sell into the subsequent rally with stops above the previous high, 1.2330 in this instance.

* The fact it has held 1.2330 will encourage further shorts with stops above 1.2330.

* Since a likely break of 1.2330 will end the uptrend, we will use these stops to exit our longs and sell into Monday!

Guest_Commentary_Using_Stops_to_Win_not_Lose_body_EUR2707.png, Guest Commentary: Using Stops to Win not Lose!

The Euro rallied strongly from below the 1.2100 major fibo target area to encourage a return to consolidation and a larger corrective recovery. Since we expect an eventual resumption of the downtrend we reduced longs on this rally as it appeared a three wave potentially corrective rally into the previous corrective high.

However, the impulsive nature of this uptrend does beg a 5 wave rally. So the current to 1.2240 38.2% of the last rally and uptrend support is enough for a correction and therefore another attempt at 1.2330. Now even allowing for failure and 1.2220 later in a more complex corrective consolidation ( to answer the simple one lower down) we are rebuying this weakness for a later spike to1.2360 5=1 potentially 1.2385-90 the major confluence area.

Since this will take out bearish stop as the Euro ends the uptrend, we look to cover/sell this rally (with 1.2425 stops) for a return to consolidation and a loss of 1.2165 overlap (stop on long) to open up a retest of the lows.

Further videos or commentaries are available from or @EdMatts on Twitter.

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