EUR/USD: Breakout Looming?

Trade Idea: 2012-1-26 1:50

EUR/USD 15-Minute Chart

As you can see on the 15-minute chart, the pair is just consolidating around the 1.3100 handle. I think that we will see a breakout happen soon, but which way would price go?

I will leave that question for the market to answer. However, once I see a strong bullish candle (preferably a bullish marubozu) close above yesterday’s high (1.3118), I will go long on the pair.

As you can clearly see, I’m bullish on the euro. That being said, even if EUR/USD breaks down, I have no plans of shorting it. Instead, I will look to buy the pair around the 38.2% and 50% levels and the previous resistance area. That is, if reversal candles form around this level.

Besides the technicals, the fundamentals also point to bullish euro and bearish dollar. Yesterday, the Federal Reserve announced that they chose to keep rates unchanged below 0.25%. In addition, they indicated that rates would most likely remain on hold until the second half of 2014, which was longer than their initial pledge.

There are also a couple of economic events that I need to watch out for, but none of them are major. Later, at 1:30 pm GMT, the U.S. durable goods orders and the weekly initial jobless claims will be released. Then, at 2:00 pm GMT, there’s the new home sales.

The headline durable goods orders is expected to have risen by 2.1% while the core version is anticipated to have gained 0.9%. As for the initial jobless claims, the number is slated to increase to 371,000 from 352,000. Lastly, new home sales is projected to have improved to 321,000 from 315,000.

That’s it folks. As always, feel free to share what you think about my trade idea.

XOXO,

Huck

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  • fedegmail

    it seems you were right, good for you… and for me too! ;)

  • Bob

    What happen to this trade? Missed it? Did’nt you say you were bullish on the pair??
    It is funny that when it comes buying the pair you are always hesitant (same as pipcrawler) or closed early but when it comes to selling you are so quick to jump in (sometime rash) at market price??

    There were numerous  buy on dip 
    opportunities for a quick profit (Also selling opportunities at 1,32).

    • huck

      That is true. I’m trying to get rid of this bad habit of being a “perma-bear” (you know those type!). I can spot bearish setups easily but I tend to be overly cautious on bullish ones. Any suggestions as to how to cure this?

  • RXK

    I’m curious about your fundamental analysis. Do you consider the COT report for any insight into large speculators and commercial interests? Historically, the report has been strong for the Dollar-Swissy pair, but also for the Euro.