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Forex: Ideas You Can Trade - EURUSD Pullback in Steep Recovery

Posted by Steven Hatzakis on May 7, 2015 2:03:00 PM

EURUSD: Volatility follows yesterday's steep move with today's pullback to 1.12 after 1.14 missed earlier

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 1.1268 around time of publication today - and after falling from a high of 1.1390 reached earlier in Thursday's trading session.

Today's pullback follows yesterday's steep bullish momentum, as the EURUSD has begun to recover higher ever since breaking above 1.10 and as forecast in the last post in Ideas You Can Trade - where a push above 1.10 was described as bullish (last week).

However, after 1.14 was missed today - a sharp pullback followed, yet this could be followed by an equally-large or even-larger push higher tomorrow if this type of volatility continues (see below the number of concurrent steep bullish channels -where the pair could continue higher).

If this recovery since 1.10 was surpassed continues and 1.14 is overcome then a higher-high should follow. Alternatively, if today's pullback deepens lower then support may be targeted back near 1.10 or somewhere above that price - where a pivot could be established. For now the momentum still seems bullish even after today's sharp pullback. 

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1301 with a Limit to take profit @ 1.1390 and a stop-loss @ 1.1251 Risk/Reward Summary: Limit risk = +89 pips profit / (-50) Stop-loss risk = Gain to Loss ratio = 1.78

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1236 with a Limit to take profit @ 1.1175 and a stop-loss @ 1.1290 Risk/Reward Summary: Limit risk = +61 pips profit / (-54) Stop-loss risk = Gain to Loss Ratio = 1.13

Medium term daily candle chart (Zoomed-in):

EURUSDDaily May 7 2015 note

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

 

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