EUR/USD: An Opportunity to Buy?

How much higher can the euro go? I’m very curious to know! I just hope that I get in on the rally before it starts! Here’s my trade idea for this week.

Trade Idea: 2013-7-24 2:05 am EST

EUR/USD Hourly Chart

I pointed out in my Pre-Week Market Analysis that EUR/USD is creeping higher up the charts. I’m a big believer in the old market saying, “The trend is your friend,” so I’m gonna try to get some pips out of this uptrend.

I’m not going to jump in immediately though as I would like to enter at a better price. I’m looking to enter around 1.3170 where the 100 SMA coincides nicely with the pair’s previous high. If reversal candlesticks materialize around the area, I’ll pull the trigger and set my stop well below the SMAs at 1.3100 while I aim for new monthly highs on the pair.

Fundamentally, there are a couple of things going for me as well. First is the rising euro zone PMIs. In the last two months, the PMIs were extremely positive, showing that the euro zone’s economy is headed in the right direction. If the upcoming PMIs come in above the 50.0 level, I think EUR/USD will be greatly supported!

It also helps that Fed Reserve Chairman Ben Bernanke’s testimony to the U.S. Congress showed that tapering isn’t a done deal yet, and that its monetary policy moves would depend greatly on fundamentals.

So to recap, based on my fundamental and technical views:

Long at 1.3170 if reversal candlesticks appear. Stop loss at 1.3100. Profit target yet to be determined. Risk disclosure.

XOXO,

Huck

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