EUR/USD Set Up Buy After Dollar's Rally
The EUR/USD also known as the "fiber" has been correcting since the U.S. Dollar Index's rally after last Friday's Non-Farm Payroll upside surprise. Dollar buyers were pleased with the jobs number and rallied both the Dollar Index and equities.
Now the EUR/USD is sitting on or near trending pattern support lines as the correction has driven price down to levels where buyers may be tempted to step in. First the 240 minute chart shows a Continuation Channel Up emerging pattern as prices rest on the uptrend line currently sitting at 1.4180. This support level is a swing buy opportunity for the intraday EUR/USD. Second, the daily chart has formed a Continuation Flag pattern. Prices have not triggered a buy off uptrend line support but a flag pattern is as much a potential reversal pattern as it is a continuation. The reversal trigger would be a break of the uptrend line support (blue) which is waiting near 1.4070. The current trend is strong as indicated by the high Initial Trend reading.
In order to measure risk and the potential for the EUR/USD to move either with or against the current trend, the average daily pip movement of the pair can be should be considered.
Notice that the potential for movement on a Monday can range from a low of less than 100 pips to a high of more than 215. The average expected pip movement is 160 and this leaves plenty of room for the daily chart to follow through with the 240 minute set up or find the support of the flag pattern on the daily. When trading daily chart keep in mind that the risk -- because of the larger window for pip movement -- will be higher than that of intraday charts.
For further information, visit http://autochartist.com
Now the EUR/USD is sitting on or near trending pattern support lines as the correction has driven price down to levels where buyers may be tempted to step in. First the 240 minute chart shows a Continuation Channel Up emerging pattern as prices rest on the uptrend line currently sitting at 1.4180. This support level is a swing buy opportunity for the intraday EUR/USD. Second, the daily chart has formed a Continuation Flag pattern. Prices have not triggered a buy off uptrend line support but a flag pattern is as much a potential reversal pattern as it is a continuation. The reversal trigger would be a break of the uptrend line support (blue) which is waiting near 1.4070. The current trend is strong as indicated by the high Initial Trend reading.
In order to measure risk and the potential for the EUR/USD to move either with or against the current trend, the average daily pip movement of the pair can be should be considered.
Notice that the potential for movement on a Monday can range from a low of less than 100 pips to a high of more than 215. The average expected pip movement is 160 and this leaves plenty of room for the daily chart to follow through with the 240 minute set up or find the support of the flag pattern on the daily. When trading daily chart keep in mind that the risk -- because of the larger window for pip movement -- will be higher than that of intraday charts.
For further information, visit http://autochartist.com
- 10 August |
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