In Price Action Trading Strategy

Last week, we were discussing the best times to use double zeros.

I argued: Not when price is making recent new highs and new lows, but rather, when price has been ‘sloshing around' the zeros for a while and is already in an underlying trend. Today, I caught a good example of this, and thought it was worth mentioning here.

EUR/USD found some uncharacteristic buying pressure early in the US session today and made a quick attempt for the zeros at 1.3900. They worked this time, and priced faded, as we've seen many times before in this kind of situation.

I'm not a fan of using double zeros when price is making new highs and new lows. Others might argue, but typically you'll see a stack of retail orders lined up around these areas (eg to sell in an uptrend) ready to get taken out and feasted upon by an eager crowd of overeager buyers.

Unless there is a strong reason around these areas (when price is making new highs and lows that haven't been seen in a long time) in the form of some fierce support and resistance or other major retracements, will I usually look to fade them.

An example when EUR/USD was on its way to new highs:

And from today:

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Showing 6 comments
  • FX-Sniper

    Very nice trade!
    Personally I use zeros for targets. Forentrys I use them, when I expect price to cross it [on really big momentum, like recent GU price action]. When I do it I open long position around 85-90 or short around 10-15 just to go to break even when price jump from zeros to 10 or 12. It usually make even bigger rally on zeros in such case, but momentum is essence.

  • Frederick

    Excuse me but what does FADING mean in your version of English?
    I have noticed it used on lots of Forex sites and tried to understand from the action taken but I cannot get a feel for the word.

    I would be grateful for an explanation.

    Genuine request!!

  • Anonymous

    Hi Frederick. It also took me a little while to figure that out. In this context, fading means "trading against".

  • TheRumpledOne

    I can't find this post:

    Last week, we were discussing the best times to use double zeros.

    Please post the link.


  • Steve W.

    @ RO sorry which one?

  • TheRumpledOne

    The post you referred to with your comment:

    "Last week, we were discussing the best times to use double zeros."

    At the top of this page!!

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