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Forex: Ideas You Can Trade - EURUSD 1.3650 Repeatedly Tested

Posted by Steven Hatzakis on May 22, 2014 2:24:00 PM

EURUSD: If yesterday's low is breached, 1.3584 could be next, then 1.3550 

The medium term daily candle chart below shows the price history of the Euro currency (EUR) versus the United States Dollar (USD). This currency pair is known as EURUSD, and trading near 1.3650, around time of publication today, after failing to hold above 1.3700 in recent days.

Last time the EURUSD was covered in the Ideas You Can Trade series, a dive had already been underway since 1.4000 was missed, and the trend was described as having turned bearish in the last post. This was when the medium term support line (point 3 in green on chart below) was being tested and which since failed, then the pair lingered around 1.3700 before moving toward current levels.

The pair has tested near today's lows just under 1.3650 for the third time in the past seven trading days, and selling pressure appears to be building which could cause a lower-low to follow. Just yesterday the pair broke the low reached in February, and reached 1.3633, and the next target should be near 1.3584 (which was last reached in January), and 1.3550 just below it.

These support levels coincide just above a very long term bullish resistance line (point 4 in red on chart below), that could provide a strong reversal (if it acts as support).Unless a sharp bounce or reversal happens near current support levels, EURUSD may look for such a level to pivot upon- on the above mentioned very long term bullish line that is now within close reach.  

Below are examples of how to trade a bearish continuation or a bullish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3710 with a Limit to take profit @ 1.3750 and a stop-loss @ 1.3670 Risk/Reward Summary: Limit risk = +40 pips profit / (-40) Stop-loss risk = Gain to Loss ratio = 1.00 

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3631 with a Limit to take profit @ 1.3589 and a stop-loss @ 1.3651 Risk/Reward Summary: Limit risk = +42 pips profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.40

 

Medium Term Daily Candle Chart:

eurusddailymay 22 2014 note

 

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