- This is one of the more interesting markets that I'm following right now, mainly due to the fact that we have recently seen a breakout and now we are looking at a retest.
- It's possible that we are going to see a complete turnaround in the trend, but this is normally a fairly messy affair for those who are more conservative.
They like to see a breakout, a pullback and retest and then eventually momentum to the upside. We have two of three so far. The 0.86 level is important as it previously was massive Resistance. And it also features the 200 day EMA. If we can continue to rally from here, then the 0.8650 level will be a potential target. If we can break above there, then the 0.8750 level is your next target.
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Is This a Trend Change?
Keep in mind that this pair had been in a massive downtrend for some time, going out a couple of years, but we've recently found a range. The range now seems to be breaking down, so I'm waiting to see whether or not this market came close a bit higher from here before I start to put money toward it. The most obvious point of support would be the 0.85 level, and if we were to break down below there, then you could say it's a busted trade.
This is more of a swing trade and a lot less of a short term smash and grab type situation, but quite frankly, it does set up quite nicely. That being said you have to keep in mind that this pair does tend to be choppy in general, so it’s not like it’s going to shoot straight up in the air. Furthermore, the pip value is much higher in this pair than it is in others, so the reality is that you don’t need huge moves to make nice profits.
At this point, I think this could be a nice trade for the rest of the year, especially if the euro somehow gets traction against the US dollar, because then it becomes the currency du jour for traders around the world, and it means that it would have even more momentum.
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