Similar Retracement Pathway Planning for the Euro EURUSD

Mar 11, 2014: 11:28 AM CST

As I highlighted this morning in the S&P 500 “Pullback Pathway Planning,” we’re seeing a similar situation develop in the EUR/USD FOREX pair.

Let’s take a look at the Euro’s break to new highs and the potential pullback – or alternate breakout – strategy planning.

EURUSD Euro Dollar Breakout Retracement Technical Analysis FOREX

Like the S&P 500, the Daily Chart reveals a pause or reversal candles developing into the upper Bollinger Band into a known resistance level (1.39000).

Actually, the 1.38000 pair level served as key resistance ahead of last week’s upside breakout which brings us to the current “will it retrace or will the breakout extend?” planning scenario.

A logical pullback or retracement down against the 1.39000 level suggests that 1,38000 (almost achieved) then perhaps 1.37500 could be achieved.

Let’s strip the chart of indicators and focus on the pure price trend structure in motion:

EURUSD EUR/USD FOREX Daily Chart Trend Structure

We see a prevailing and strong uptrend into the current highs, but we also note a persistent swing structure to the trend.

In other words, the trend has been relatively stable with few impulsive or sustained (extended) swings.

With price trading into the upper rising channel trendline, it would be logical – though of course not guaranteed – to see yet another pullback down away from the 1.39000 level.

Also like the S&P 500 planning, a continuation of the uptrend (without a logical retracement) suggests that the Euro would continue to extend and impulse higher against the US Dollar.

Here’s the intraday level planning to watch closely:

EURUSD EUR/USD FOREX Intraday Planning Retracement or Breakout Trading Strategy

From the pure chart perspective, a break down under the 1.38500 level suggests that the Euro could trade down (retracing on the higher frame) from 1.39000 toward the trendline and triangle target just above 1.37500.

Note the red “dominant” price pathway planning along with the green “alternate breakout/trend extension” pathway along with the yellow caution or range zone developing in the FOREX pair.

Structurally, it’s still similar to the S&P 500’s short-term range pattern intraday and the potential for a strong, trend extension breakout that would defy classical chart logic (which suggests a pullback from the highs is more likely).

Note key levels and adjust accordingly to the dominant/logical thesis or an alternate breakout outcome.

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Corey Rosenbloom, CMT
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