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Forex: Ideas You Can Trade - EURUSD Pullback Nearing 1.3500

Posted by Steven Hatzakis on Jul 17, 2014 2:29:00 AM

EURUSD:  1.3500 likely to be tested as pullback doesn't appear to be over yet

The medium term daily candle chart below shows the price history of the Euro currency (EUR) versus the United States Dollar (USD), known as EURUSD, and trading near 1.3522 around time of publication today.

Over the last three days the pair has traded lower, and appears to be re-entering a downtrend, with the next support level possible near 1.3500 and further support near 1.3475, in the very short term. 

From a longer term perspective, looking at the additional weekly chart below, we can see the EURUSD is at a crossroads, and bordering at the edge of a drop-off. 

Last time the pair was covered in this series, a recovery appeared to be building, but that effort failed earlier this week, as bearish resistance cause the EURUSD to push under the bullish support line that holding that recovery in place.

Since then, the recovery that has just begun doesn't appear over yet, with prices likely to inch slightly lower before support is found.  

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3546 with a Limit to take profit @ 1.3572 and a stop-loss @ 1.3529 Risk/Reward Summary: Limit risk = +26 pips profit / (-17) Stop-loss risk = Gain to Loss ratio = 1.52

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3518 with a Limit to take profit @ 1.3499 and a stop-loss @ 1.3531 Risk/Reward Summary: Limit risk = +19 pips profit / (-13) Stop-loss risk = Gain to Loss Ratio = 1.46

Medium Term Daily Candle Chart:

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