Trading Forex – A look at EUR/USD

Posted on 07. Sep, 2011 by in Forex Signals, How To, Random Noise

We currently have a very volatile market. Last Friday we had NFP which came out with no change, not reflecting the expectations for the release. In addition to this we had news from SNB yesterday announcing a minimum rate of 1.20 on EUR/CHF which gave us an immediate surge in the pair, moving it up to 1.20 within a few minutes.

Trading Forex – Bias on EUR/USD

We often tend to see close to a perfect inverse correlation between USD/CHF and EUR/USD. However, as I have highlighted several times before, when the trigger for a move like the one we had yesterday is based on highly fundamental release from either ECB or SNB, the correlation is likely to fade. This is exactly the case with yesterday’s move. Don’t make the mistake and look for a drop in EUR/USD of 800 pips because of the rally on USD/CHF. EUR/USD is left somewhat in a twilight zone, at least in terms of relation to CHF, as we had a surge in both USD/CHF and EUR/CHF.

With this in mind, I think we are likely to see a bit of upside on EUR/USD, going closer towards the end of the week. Obviously we have several high impact news releases which could blur the picture, but this is my current standpoint.

Trading Forex – Technical Perspective

Take a look at the picture below. This is the daily chart on EUR/USD. The pair currently trades at the 1.4065 level.

On the daily timeframe, the pair is clearly trading in a range, and we are currently in the lower part of that range. The 1.4000 level has proven to be a key level of support at previous tests of that level. Keep in mind this is also a psychological level, which tends to show strength as support or resistance.

The picture above shows the 5-minute chart. The pair is currently trading above our first key level for the day, and we are looking at the 1.4085 as the next level to keep an eye on. In addition to this, the pair has steadily been making higher highs throughout the entire Asian session, and overall, I think further upside is possible.

Trading Forex – Ideas

With the above mentioned aspects in mind, I am mainly looking for a long trade. With that being said, we are currently in a long trade from the 1.4005.

With a pullback down to the 1.4000 level, I think there should be a good chance to enter on a long trade. A 50 pip stop loss should be sufficient. The 1.4085 level should be a viable profit target, but I would prefer to hold on for a bit more. A breach of the 1.4085 level and a clear close above it, could give continuation to the 1.4155 level and possible higher. These are the key levels I am looking for.

Related posts:

  1. Trading Forex – EUR/USD More Downside?
  2. Trading Forex – Currently Long on EUR/USD
  3. Trading Forex – EUR/USD Ready for Further Downside
  4. Trading Forex – Cable Below Key Level
  5. Trading Forex – Perfect Trade but Still in Range

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