EUR/USD: A New Trend Higher?

Trade Idea: 2011-6-22 2:19

EUR/USD 1-hour Chart

I’m doing it again. I’m going to buy the dip! This time, however, it’s gonna be EUR/USD. While my plan on GBP/USD didn’t work out too well last week, I’m hoping this time I’ll get lucky!

The new development in Greece’s bailout debacle is the main reason behind this long trade. Yesterday, Prime Minister George Papandreau garnered a positive vote of from Greece’s socialist government, indicating that Greece could be eligible more funds.

The only thing that is left is for the government to agree to a 5-year austerity package. I must admit, compared to last year, things are looking pretty good for the euro right now!

I’m also expecting the upcoming FOMC interest rate statement to provide support for my long trade. From my experience, whenever the FOMC announces its decision on interest rates, the dollar tends to fall on bearish comments.

On the technical side of things, it looks like EUR/USD is on an uptrend as evidenced by the higher lows which form that rising trend line. I’ve also noticed that the pair has been tapping new highs for the past couple of days.

However, I’m not gonna jump in on this trade just yet. Looking at Stochastic, it looks like the pair still has some room to trade a bit lower. Using the Fibonacci retracement tool, I noticed that the 50% level lines up nicely with the trend line and the minor support and resistance area.

So, this is how I’m gonna play the setup:

I’m gonna wait for reversal candlesticks around 1.4320 before jumping in. If my trade gets triggered, I’m looking to take profit at 1.4500. As for my stop, I will set it just a few pips below the week open at 1.4260. My trade has a 3:1 reward-on-risk.

Let’s see how this trade works out. Cross your fingers for me! Till next time!

  • Newguy

    Thinking the same thing.  Will try to nibble in on the long side on any short term correction off a rising intraday moving average.  Watching out for Italy, though.  Seems Equities are still in a medium term downtrend as well. 

    • huck

      Looks like we missed our entry though. 1.4350 was the bottom! Let’s see if it retraces.

      • PippinCycle

        Nice set up. I have also been bullish on the EURUSD but its volatility because of debt problems, i have decided to watch and no trade. I will keep studying it untill 30th June when US QE2 ends.

      • PippinCycle

        Put a buy limit on 2 lots and joined the trade. Good luck to us

  • Joshua Pearce Gibson

    blahblahblah something-or-other Irish default blahblah —>

    .. Pin off the grenade?

  • Dean FX Paul

    I’m looking for a 1.4500 hit in the next short-term.. not sure if it will retrace down to 1.4300s, but good luck!

  • njanto

    am I the only one how is selling eur/usd 🙁
    I feel like such a loser

    • Joshua Pearce Gibson

      No, you’re not the only one shorting eurusd lol. don’t let other peoples’ comments on a website alter your trading bias.

  • njanto

    am I the only one who is selling eur/usd 🙁
    I feel like such a loser

  • DP

    With all the debt problems in Europe, why would anybody go long the Euro?? I’m shorting the Euro-USD every chance I get!

    • huck

      Phew. I did not take the long. I did not see any reversal candles, so I’m safe. But I did short USD/CHF two hours ago…