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EUR/USD Runaway Bullish Signal
- Daily and 4H: We ended last week seeing a slightly bullish bias to the EUR/USD, although the pair still remained in range. (Refer to Weekly Technical Update 11.06.2009).
- The pair shot through the 1.4900 area to start this week in the Asian session and continued in the European session and extended into the US session as well.
- The surge left our range and is now trying to penetrate the 1.50 or 78.6% retracement area. Next resistance is around 1.5100, the previous peak.
- The breakout was a strong signal. Now we need a trigger. If the market retraces back to near 1.4900, bottoms, and shows any bullish sign, that may be a trigger. Let’s set up some risk analysis.
EUR/USD Risk Analysis
- 1H: We have a break of the channel and the channel break out target is basically reached within a 10-pip difference.
- So far the market is rallying sharply, but if we do see a retracement that stops short around the 1.4900 area, we can anticipate a rally. A trigger may close near 1.4950. A 2-ATR distance from the 1.4900 powerline in addition to the anticipated trigger would be a distance of 70-80 pips.
- T1 is the resistance of the former peak at around 1.5060. This would yield a reward to risk of almost 1.45:1. T2 (1.5100) is a swing projection of the previous upswing and yields a reward to risk of 2.1:1.
Fan Yang
Currency Analyst,
Commodity Trading Advisor
