EURUSD: Gradual ascent up short term support channel continues
The medium term chart below shows the Euro currency (EUR) versus the United States Dollar (USD); this currency pair is known by EURUSD symbol. The pair is currently trading 1.3575 (as of publication) and trading near the support line of a short term bullish channel (point 2 in blue on chart) which had provided support nearly a dozen times over the most recent weeks following the sharp break above the very long term bearish resistance bearish resistance (point 5 in dark red).
That sharp break-out followed as predicted after a previous article earlier last month where the break above the very long term bullish resistance line (point 4 in red) was noted as a potential catalyst that could drive the price of the EURUSD up a steep shot term bullish trend line that had been plotted on the chart (point 1 in white).The pair had since broken below the steep line, but found support along its current trend line (point 2) where it has since made a gradual climb higher.
Unless the support line of the short term bullish channel (point 2) fails, the EURUSD looks bullish over the short term and may target a bearish resistance line parallel to the long term bearish support (in dark red) just below it. Such a bullish direction could follow along a newly developed steep short term bullish line (such as point 1) with a target of 1.37 over the next few weeks near the 100% Fibonacci line (point 9 in dark gray).
If the support line of the medium term channel fails, a short term bearish channel (point 6 in magenta) has been plotted as a potential continuation line with a target of the long term bearish resistance level (point 5). If this happened the pair could trade towards 1.33 and may encounter a series of both bullish and bearish trend lines converging over multiple time frames through that price (roughly) which could act as reinforced support.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3601 with a Limit to take profit @ 1.3656 and a stop-loss @ 1.3571 Risk/Reward Summary: Limit risk = +55 pips profit / (-30) Stop-loss risk = Gain to Loss ratio = 1.83
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3529 with a Limit to take profit @ 1.3479 and a stop-loss @ 1.3561 Risk/Reward Summary: Limit risk = +50 pips profit / (-32) Stop-loss risk = Gain to Loss Ratio = 1.51
Medium term daily candle chart: