EURUSD: Bearish Support Line Near 1.1700 Within Range as Bearish Momentum Holding Firm
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 is trading near 1.1800 around time of publication after recovering from session lows near 1.1753 early today.
Barely ten days into 2015 and already the EURUSD has fallen nearly 300 pips, and continuing to make new multi-year lows, within an overall bearish trend that the pair has been stuck in since last summer.
Since the last post about EURUSD in Ideas You Can Trade, last week, when the downside target of 1.1875 was forecasted, that target level failed to support prices (even though it was reached) and a lower-low has materialized today near 1.1753.
Looking at the slope of the medium term bearish channel (point 6 on chart below), it appears that the EURUSD could find support near 1.1700 and therefore still has room to go lower. On the other hand if support - which just currently recovered above 1.1800 - can be maintained a bullish continuation could develop but seems less likely. Lastly, the long term support lines as seen in the additional weekly chart below could affect the next move for the pair.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1902 with a Limit to take profit @ 1.1957 and a stop-loss @ 1.1867 Risk/Reward Summary: Limit risk = +55 pips profit / (-43 ) Stop-loss risk = Gain to Loss ratio = 1.27
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1752 with a Limit to take profit @ 1.1702 and a stop-loss @ 1.1785 Risk/Reward Summary: Limit risk = +50 pips profit / (-33) Stop-loss risk = Gain to Loss Ratio = 1.51
Medium Term Daily Candle Chart:
Longer Term Weekly Candle Chart: