The Euro (EUR/USD FOREX) faces a key decision point on the chart, and the current structure gives us clear planning levels for what to expect on a breakout or retracement down against current levels.
By reader request, Let’s update the levels and plan quick strategies within the context of the current chart landscape:
From a trend or structural standpoint, the EURUSD (Euro) is in a confirmed short-term uptrend as evidenced by the rising trendline and sequence of higher highs and higher lows.
However, we now face a decision point into the current resistance near 1.38000. That will be our focal point for a “Breakout or Retracement” strategy in the near future.
The negative momentum divergences help tip the odds to a possible “stall or retracement” down against 1.38000.
The dominant short-term chart pattern is a slight Symmetrical Triangle that appears to be developing into the 1.38 resistance and 1.35 trendline support.
It’s generally a good strategy to play the movements or “ping-pong” between compressing trendlines whenever possible.
Price will likely break through one of these compressing trendlines, generating a future breakout trading opportunity.
Let’s pull the perspective back for additional insights along with a Fibonacci Planning Grid:
Starting with the early 2011 high to the mid-2012 low, we see a dominant Fibonacci Retracement grid as drawn.
It categorizes the nature of the retracement or reaction up off the low.
Price recently trades into the upper resistance (target) of the 61.8% upward retracement which is again the focus of our Daily Chart planning.
A future breakout higher continues the short-term uptrend and suggests a possible “Open Air” upward reaction higher.
A downward reaction here (into the target) suggests that 1.35000 will be retested as a downside swing trading target.
A breakdown under 1.35000 suggests that a deeper retracement is developing which would open a future play to the 1.31600 level.
I also wanted to show the two periods of “Momentum Compression” on the chart – note the red compressing “triangle” trendlines in momentum.
Compression (consolidation) of momentum tends to precede a volatile or trend impulse style price move.
Monitor these levels and note any break beyond these boundaries in the structure.
Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning parameters as we watch a “hold and bounce” or “break and retrace” scenario play out in the near future.
Corey Rosenbloom, CMT
Afraid to Trade.com
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