EURUSD Strength Continues Near Key Long-Term Level
Cory Mitchell, CMT
The EURUSD continues to strengthen. Today it is retesting the two-year high near 1.19 which it hit yesterday.
The weekly chart shows the descending trendline, extending back to the 2008 high, being challenged.
The descending regression channel from the same point shows the price could move up to 1.22 and still be within the "best fit" channel area that covers more than a decade of price action.
Trading the EURUSD
Currently, we have long green candles on the weekly, so there are no trades there based on strategies I use. I will be watching for a pullback and consolidation like we had in June and early July. If this is followed by an upside breakout of the consolidation that could provide a trade trigger for a long (like the week of July 13).
Alternatively, if the price stalls out between the descending trendline and the top of the regression channel, watch for a breakout in either direction. A wide-ranging and choppy pattern is typical of a top, which could indicate the EURUSD could be in for a large retreat.
Dropping down to the daily chart, we saw a brief pullback and consolidation between July 31 and Aug. 4. We then had the upside breakout today. If not in, await another entry opportunity on a consolidation breakout.
Alternatively, if the price gets choppy here between 1.17 and 1.19, and can't penetrate through 1.19 convincingly, the price could slide back to test 1.17. Given the strong uptrend, I would still give the uptrend the benefit of the doubt. Watch for a retest of the 1.17, or even a false breakout to the downside. Then, if the price starts moving back up that is a potential long trade with a short-term price target just below 1.19 and a longer-term target near 1.21.
Watching the price action is important around these key levels, as these levels provide some of the best trading opportunities. Here's a video on how to spot trends and reversals in realtime.
Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.