Trade Idea: 2012-1-26 1:50
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.