Good evening forex traders! I just wanted to share a potential setup that I’m watching at the moment. It was all about being long euros since last week’s statement from Draghi. Will it continue with a pullback?
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I’ve got the 240 minute chart of EUR/USD above, and I’ve marked where Draghi and the ECB surprised the markets with his bullish euro comments after holding interest rates at 0.75%. As we can see, this rocketed EUR/USD higher, and now it looks like it’s on its way to test 2012 highs just under 1.3500. So, despite recent weak economic data, the euro is trading on ECB hope and rhetoric. I can’t really fight how traders want to price in the environment so I’ll look to go with the flow for now as it doesn’t look like we’ll get any major news catalysts from Europe or the US this week in the calendar.
But before entering into a long EUR/USD position, I’m gonna sit back and watch this pair to see if we will get a retest and if buyers take back control around the 1.3200 handle. If that happens, movement below the recent swing low would invalidate a long swing position, while I expect 1.3500 to be an area of potentially strong technical resistance.