After an impressive rally following the German unemployment numbers this morning, the Euro backed of a bit following the U.S. ADP payroll data, before mounting a slow rally throughout the rest of the session in sympathy with its long-term trends.

The market gave a nice trend trigger between the economic releases which I’ve highlighted on the chart below.

Chart courtesy of eSignal

It was trend trigger because the intermediate-term trend on the 60-minute chart was higher, making any triggers, on the shorter-term, or lower time frames, trend trades. Because it is a day trade and we’d be trading multiple contracts, we would not have traded ahead of the European economic releases. Once those scheduled winds had blown we would have been clear to trade. Prior to the buy trigger we see this market respecting its central Pivot Point (previous H + L + C/3), and we know from our directional ratio or from just eyeballing it that the short-term trend on the 60-minute, 240-minute and daily charts are all higher. Now once we see the Euro trade above the previous day’s high, we can pull back to the 15-minute chart to manage the trade and wait for the sell signal to exit. We would also have the option of taking a portion of the position off at the previous day’s high, or at Pivot Resistance 1, but with the immediate trend up in all time frames you would also have the option of letting your profit run, until just ahead of the U.S. numbers, or until we received a sell signal. I’ve marked the buy signal with a vertical green line and I’ve marked the sell signal with a vertical red line. The key here is that we did not carry positions through economic releases, and we still took out a nice trade, one that looked to have about a 2-1/2 to 1 risk/reward, if you measured your risk from the original buy to just below that central Pivot Point.

Tomorrow in the currency markets all attention will be on the U.S. non-farm payroll numbers at 8:30 EST.

If you have any questions feel free to give me a call or shoot me an e-mail.

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