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Forex: Ideas You Can Trade - EURUSD Looking To Build Support Higher

Posted by Steven Hatzakis on Oct 27, 2014 3:55:00 AM

EURUSD:  Support Near 1.26 found after 1.25,  Now 1.27 is Next

The medium term daily candle chart below shows the price history of the Euro currency (EUR) versus the United States Dollar (USD), known as the EURUSD symbol, and trading near 1.2691 around time of publication today.

Earlier in October in the last post about this pair in the Ideas You Can Trade series - prices were holding above the 1.27 level and a recovery from 1.25 that had occurred was described as either being a reversal or dead-cat bounce. Since then the pair nearly touched 1.29 then reached just below 1.26 and is now hovering under 1.27.

Although several bearish elements have coincided in recent months, such as the short term bearish channel (point 6 in red on chart below) and break below the very long term bearish resistance line (point 5 in dark red on chart below), the support found above 1.2500 may be the key to reversing the EURUSD downtrend. The pair has since built support on 1.26, and is now about to reach 1.27 where it may look to do the same, with 1.2750 the next upside target.

On the downside a break below 1.25 would be very bearish, and would be fueled if USD strength returned.

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2709 with a Limit to take profit @ 1.2749 and a stop-loss @ 1.2673 Risk/Reward Summary: Limit risk = +40 pips profit / (-36) Stop-loss risk = Gain to Loss ratio = 1.11

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2610 with a Limit to take profit @ 1.2561 and a stop-loss @ 1.2645 Risk/Reward Summary: Limit risk = +49 pips profit / (-35) Stop-loss risk = Gain to Loss Ratio = 1.40

Medium Term Daily Candle Chart:

EURUSDDaily October 27 2014 note

Longer Term Weekly Candle Chart:

EURUSDWeekly October 27 2014 long term note

Topics: EURUSD, EURO, forex trading, technical analysis, USD, $EUR

 

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