EURUSD scalping strategies to consider
The Euro against the USD - the most liquid pair
Of all the currency pairs to choose from, EURUSD is the most liquid. This liquidity produces a deep or smooth market where you have a tendency not to see erratic price moves or gaps. This has resulted in EURUSD scalping techniques being very popular amongst day-traders.
What is a scalping in EURUSD?
Scalping is a style of trading. The aim of EURUSD scalping involves buying or selling the currency pair, holding the position for a small amount of time, hoping to benefit from many quick profits.
A trader might look to a higher timeframe to get a feel for the long-term trend, but it makes sense that most scalping techniques are based on short time frames and technical analysis.
Reversal candle formations
EURUSD scalping can involve reversal candle formations. From my experience, the strongest three candle pattern is Doji Star. The strongest two candle pattern is an Outside Candle, not to be mistaken for an Engulfing. When one of these psychological patterns emerge, we often get a correction or reversal.
Figure 1 reversal candles
Breakout and continuation strategies
Markets tend to consolidate more than they trend. This often forms a channel. Scalping techniques tend to look for signals of a breakout or continuation within the channel. A breakout will often see a retest of the breakout level.
Figure 2 breakout after consolidation
Combining indicators to the price action
Traders often use indicators to highlight various factors like overbought and oversold extremes, divergence, stochastics crossover and many more.
In the example below we can clearly see bearish divergence. The chart makes a higher the while the oscillator makes a lower high.
Combining indicators with price action can result in a solid EURUSD scalping technique.
Figure 2 bearish divergence
For more education material on scalping from Pepperstone, click here.
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