The currency pair Euro versus US dollar (EUR/USD) has been rallying over the last week, including a move of about 300 pips from last Friday’s low to this morning’s high.
As with most markets, we want to trade the trend; and as the EUR/USD is pulling back intraday, we are looking to buy a dip.
On the 30-minute candlestick chart below, the grey shaded region indicates an area in which price traded in a range this week before taking off yesterday following the FOMC announcement.
We expect some support this week in this grey area. Rather than having specific levels, we will be watching candlestick formations in this zone to indicate a reversal, and then we look for this market to trade back to this morning’s high of 1.1777, shown by the green price line at the top of the chart.
We may lose our bias is if this market breaks below the yellow solid line at the bottom of the shaded area, which represents 1.1620 level. Below this price, we see the possibility of sell stops being triggered, leading to a retracement back to Friday’s low. This is reflected by the grey circle on this chart, coming in around 1.1480.
Traders of this market should be aware of multiple economic reports this morning, including, but not limited to:
Durable Goods Orders 8:30 AM ET
International Trade in Goods 8:30 AM ET
Jobless Claims 8:30 AM ET
Chicago Fed National Activity Index 8:30 AM ET.