EURUSD: Support Found on Dynamic Medium Term Bullish Line, near 1.3760 Today
The medium term daily candle chart below shows the history of the Euro currency (EUR) versus the United States Dollar (USD), known as EURUSD, and trading near 1.3764 around time of publication today, and near session lows after dropping nearly 90 pips earlier.
Earlier this week the bullish momentum made the pair appear to be heading towards 1.4000 and while a higher-high did follow as predicted it wasn't nearly as high as we had expected in the last post about the EURUSD in this series.
To be exact the pair failed to move higher than 1.3992 following the above mentioned post earlier this week, and since then it has dropped sharply, diving to today's low of 1.3753.
Not coincidentally, the low of today appears to intersect exactly on the medium term bullish support line (point 3 in green on chart below) which had been drawn previously, with its trajectory extended out into the future. If that line can provide support, as it already has shown holding today's low, then a bounce could prevent the steep dive that has already occurred since the pair failed to pierce or even touch 1.4000.
While such a bounce could enable a sideways market to build up along the support line and retest the highs of April and the high already made in May, if 1.4000 is reattempted, a failure along current support near session lows, could cause 1.3600 to be the next stop for support under current prices.
Therefore, the very short term trend has turned bearish, although traders may be watching the above mentioned support level in order to anticipate the direction from here.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3851 with a Limit to take profit @ 1.3899 and a stop-loss @ 1.3829 Risk/Reward Summary: Limit risk = +48 pips profit / (-22) Stop-loss risk = Gain to Loss ratio = 2.18
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3738 with a Limit to take profit @ 1.3702 and a stop-loss @ 1.3771 Risk/Reward Summary: Limit risk = +36 pips profit / (-33) Stop-loss risk = Gain to Loss Ratio = 1.09
Medium Term Daily Candle Chart: