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Forex: Ideas You Can Trade - EURUSD Still Caught in Downtrend

Posted by Steven Hatzakis on Aug 19, 2014 5:03:00 AM

EURUSD: 1.3350 Holding as Triangle Formation Appears

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 1.3351 around time of publication today.

Over the last few weeks the pair has been stuck in a range between 1.3350 and 1.3400 while caught in an overall downtrend that has persisted for most of 2014.

A longer term bullish trend line has provided support at least four times over the last twelve trading sessions, and together with the shorter term bearish resistance lines is has formed a symmetrical triangle formation (the lower side of which is being tested today).

While prospects for the EURUSD still remain bearish, and as was discussed in the last post about this pair in the Ideas You Can Trade series, a bullish recovery even if short-lived could catch bears by surprise even assuming that a lower-low will be reached thereafter.

Therefore once a breakout occurs from the range that the EURUSD has been trading within, if the move is to the upside it may be temporary, whereas a downside move could be larger and more sustained. A weekly candle chart has also been provided further below for perspective of the longer term trend.

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.3414 with a Limit to take profit @ 1.3449 and a stop-loss @ 1.3382 Risk/Reward Summary: Limit risk = +35 pips profit / (-32) Stop-loss risk = Gain to Loss ratio = 1.09

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.3305 with a Limit to take profit @ 1.3256 and a stop-loss @ 1.3341 Risk/Reward Summary: Limit risk = +49 pips profit / (-36) Stop-loss risk = Gain to Loss Ratio = 1.36

Medium Term Daily Candle Chart:

eurusddaily august 19 2014 note


Longer Term Weekly Candle Chart:

eurusdweekly august 19 2014 note

Topics: EURUSD, EURO, forex trading, technical analysis


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