On the chart above, you see that the pair just broke out of its consolidation and pierced through the falling trend line resistance. Now that the pair stalled around the 1.3250 level, I’m thinking this is the perfect time to enter at a retracement and buy the pair at a cheaper price!
Using the Fibonacci tool, I have determined that 1.3200 is a very good level to buy. In addition to being a major psychological level, it also coincides nicely with the 50% Fibonacci retracement level and the broken falling trend line. Remember, whenever price passes through a resistance level, that level usually becomes support.
As for my stop, I’ll place it around the most recent swing low at 1.3100. I’ll ultimately aiming for 1.3400, but I’ll of course take off the table along the way to reduce risk.
Of course, I’ll have to keep an ear out for the ECB interest rate decision scheduled later today. I’m hoping to hear a few optimistic remarks about the region and consequently spur the euro on a rally.
If this turns out to be the case, we’ll see diverging outlooks between the ECB and the Fed. If you remember, part of the reason why the dollar lost last week was because of Bernanke‘s dovish comments.
Also, I’m keeping all my fingers crossed for positive updates about the Greek debt deal. Market participants have been waiting for a final agreement between the government and its creditors for a while now. It would be nice to hear that good progress is being made behind closed doors.
Anyway, this is my game plan:
Buy EUR/USD at 1.3200, SL 1.3100, PT 1.3400, 1% risk
Wish me luck!
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