Posted by Steven Hatzakis on Wed, May 13, 2015 @ 11:54 AM
EURUSD: Pullback in steep recovery ended as bullish channel regained and resistance on 1.1389 is nearby
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 EUR/USD, and is trading near 1.1370 around time of publication today and near session highs of 1.1381.
EUR/USD was last reviewed in Ideas You Can Trade last week when a pullback was described in the steep recovery that had already begun. Volatility was expected and continued since then, and that pullback has now ended as the steep bullish channel (see chart below) has just been regained – although barely.
If resistance near last week’s high of 1.1389 is overcome, and 1.1400 is reached, this should be a bullish sign that could enable a continuation higher, whereas if 1.1400 is missed or cannot be maintained – then a sharp reversal could follow.
Either way, expect volatility around this level, and traders should exercise due caution and adjust trade sizes accordingly as high risk/reward events could precede a move in either direction.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1401 with a Limit to take profit @ 1.1449 and a stop-loss @ 1.1361 Risk/Reward Summary: Limit risk = +48 pips profit / (-40) Stop-loss risk = Gain to Loss ratio = 1.20
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1273 with a Limit to take profit @ 1.1218 and a stop-loss @ 1.1319 Risk/Reward Summary: Limit risk = +55 pips profit / (-46) Stop-loss risk = Gain to Loss Ratio = 1.19
The PremiereTrade Wizard’s decisive colors are great for analyzing any currency pair.