Gauging Expectations for Trades and Pip Movement

Among the most important criteria for trading are time and expected pip movement. These help determine risk/reward levels. To place these randomly makes little sense when there are excellent tools available to statistically decide where the market may go or alternatively, the amount of pips it may move hour by hour, or even specifically day to day. Today we'll examine the hourly movement as it pertains to a chart alert.

Today all eyes will be on the EUR/USD as the post-FOMC environment continues to unravel the U.S. Dollar and rallies the Dow Jones Industrial Average. Secondly, one should keep an eye on the USD/JPY for the risk appetite that the FOMC comments have triggered.





The graph above is shown in Eastern Standard Time and lays out the expected movement for the EUR/USD. It has been calculated from the past six months of hourly pip movement. Since this is Summer and the activity is markedly less, take a look at the one month sample below.




Now consider the difference between the 8am and 10am hour of day periods with the different samples. The one month graph has less pip movement. Now take that into account with the 60 minute EUR/USD Continuation Channel Up alert.




Notice that the EUR/USD is heading higher in an uptrend but has a low Initial Trend reading. This could signal either a pullback opportunity to buy off support or a potential reversal, which would be triggered by a break of the same support level. Refer to the pip movement graphs to gauge what the pullback may be.

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