EURUSD: At a Crossroad and Poised to Make a Steep Move in Either Direction
The medium term chart below shows the Euro currency (EUR) versus the United States Dollar (USD); this currency pair is known by the EURUSD symbol. The pair is currently trading near 1.3591 and very quiet in today’s trading session which only had a small range of 25 pips after yesterday’s holidays - although has now expanded to a 38 pip range as it has edged a bit lower as the trading week comes to a close with the approach of the NY session ending.
The pair may have coincidentally reached a turning point, and the quite before the storm may be upon us, as the bullish price momentum that continued after last week’s volatility has reached a line parallel to the very long term bearish resistance line (point 5 in dark red on chart) which may act as a reversal of the current bullish trajectory up the steep bullish trend line (point 1 in white) as well as the support line of the previous short term bullish channel (point 2 in blue) which intersect current levels – thus providing an entry to regain that channel (point 2). If this happens, the 100% Fibonacci level (point 9 in gray) may be re-targeted near 1.3700 in coming days/weeks.
If this resistance line (parallel to point 5) cannot be overcome, a steep drop could follow along a line parallel in slope to the short term bearish line (point 6 in magenta) with support further below on a line parallel to the short term bullish channel (point 2) just above it, and further support on three lines which diverge from one-another including the very-long term bearish resistance (point 5) and very-long term bullish resistance (point 4 in red) and 61.8% Fibonacci level (point 9 in gray – after having intersected each other last time the EURUSD reversed upon their lines.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3625 with a Limit to take profit @ 1.3691 and a stop-loss @ 1.3564 Risk/Reward Summary: Limit risk = +66 pips profit / (-61) Stop-loss risk = Gain to Loss ratio = 1.08
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3558 with a Limit to take profit @ 1.3509 and a stop-loss @ 1.3589 Risk/Reward Summary: Limit risk = +49 pips profit / (-31) Stop-loss risk = Gain to Loss Ratio = 1.58
medium term daily chart: