"INDICATOR OF THE DAY" - AVERAGE TRUE RANGE
The cross has gone parabolic over the past few days with the market now trading into the 1.5400’s on Monday. The aggressive upside move has put the daily RSI back above the critical overbought 70 level for the first time since May 2008 and now warns of the potential for a decent sized pullback ahead. As such, we will look to implement ATR (“Average True Range”) analysis to generate an ideal sell entry point on Monday.
Eur/Chf - We often use ATR in our daily analysis and place the indicator at the top of our list as an invaluable technical tool that provides compelling insights into market price action and potential reversals. The concept of ATR is simple. The indicator calculates what the daily average true range of a specific security will be, based on a calculated average of the previous days’ ranges. As applied to Eur/Chf today, we can see that the market has established a daily low by 1.5287. If we were to utilize ATR as a means of projecting/forecasting where the daily high could be today, we would simply look at the daily ATR of 168 pips and add it to the current daily low of 1.5287 to give us a projected high and ideal sell entry of 1.5455. Strategy: SELL @1.5450 FOR A 1.5200 OBJECTIVE, STOP @1.5525. Stops to be trailed to cost on a break back below 1.5450. Recommendation to be removed if not triggered by NY close on Monday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
If you wish to receive Joel's reports in a more timely fashion, e-mail jskruger@fxcm.com and you will be added to the "distribution" list.
Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)
“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
“Daily Classical” – A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)
