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If you have been following the article EUR/USD: August 14 2012, Rally Sustainable? For the Short Term, you would have been reminded of the fact that 1.2390/1.2400 remains the key resistant level for the past few days. 1.2260 remains the buying level of the day as EUR/USD was pushed back up to 1.2280 levels at the point of writing showing a long lower shadow in the last candlestick. If price head lower than 1.2250, this will put short term trend back to the selling side.
Using the 200Moving Average as a Gauge, this will tell us that we should stick by the short side and sell at rally. If price is clearly below the moving average and short term rally presents opportunity to enter, do so considering to your risk management plan. Stubbornness to stick to selling and ignoring flesh news is a discipline approach to drive out emotions off trading as we based on the results it was able to achieve in the past. While past results are not representative of the future, reacting to fresh news and the short term up and down is a worst approach. Relying on a systematic way will guide you in participating in the EUR/USD downtrend and tells you that picking bottom is not easy tasks and costly in terms of time, effort and money if whipsawed as we seen how the pairs rallied and died with a downtrend. Time, effort and money are what institutional traders have but not the retail traders. Thus, sticking to the 200Moving Average systematically and a Long Term outlook will be the playing field. Attached below is a strategy executed with 200Moving Average along with privately owned code to conduct over a period of 6 years to derive the following stats. It is able to derive a decide profit factor of 1.84
More confident following simple rule now?