EURUSD: Nearing Medium Term Resistance after Bounce on Long Term Support line
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 1.3625 around time of publication today.
Support has been building gradually since a bounce around the long term bullish trend line occurred earlier in June when the EURUSD was last reviewed in this series, and when it was anticipated to trade lower. While it did indeed trade lower – only briefly – since that last post, the bounce that happened just above 1.3500 has enabled the pair to slowly return to current prices were it now looks poised to test a medium term bearish resistance line (upper yellow line on chart below).
If this resistance line can be overcome, the steady ascent may follow and could even pick up speed as the pair has seen its volatility stagnate to a lesser degree in recent weeks, trading in just over a hundred pip range. If resistance holds however, then 1.35 could be revisited soon, and is where considerable levels of support still exist as discussed in the last post.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3674 with a Limit to take profit @ 1.3711 and a stop-loss @ 1.3639 Risk/Reward Summary: Limit risk = +37 pips profit / (-35) Stop-loss risk = Gain to Loss ratio = 1.05
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3545 with a Limit to take profit @ 1.3501 and a stop-loss @ 1.3581 Risk/Reward Summary: Limit risk = +44 pips profit / (-36) Stop-loss risk = Gain to Loss Ratio = 1.25
Medium Term Daily Candle Chart: