WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

Forex: Ideas You Can Trade- EURUSD Gradual Climb Up Support Channel

Posted by Steven Hatzakis on Oct 7, 2013 6:02:00 PM

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:

eurusddaily oct 7 2013 note


Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

Browse our frequently asked questions and find your answers right away.

Access to the educational lessons, webinars and platform walkthroughs.


Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!