Trading Lesson: Same Old Price Levels, different times?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
When speculating in the FX-market, we should always consider that each price level represents a tangible relationship between two currencies, which may have drastic economic implications, from penny to penny. Therefore as we observe the market establish support and resistance levels, we should note these price levels as they may re-emerge in the time to come. For example, as the EUR gained strength against the USD, eventually topping just under the 1.30 handle, this resistance point told us that the market was not willing to pay more than 1.30 in the past year +, given the current economic conditions. At times these support and resistance levels may become quite strong as is the case with the 1.30 double top most recently. However it is interesting to note this same price level did in fact represent a short-term support in Jan. 2005. Note the common price levels that support and resistance points have shared over the past few years. The market will often times, find these short-term resting points as the markets price action continues to bounce or oscillate between each one. As the FX-market spends quite a bit of time in a range bound condition, we should note these price levels, as they may once again be of service to us in the time to come.
