Structure and Fibonacci Planning Levels for the Euro EURUSD

Feb 27, 2014: 12:32 PM CST

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:

EURUSD Euro EUR/USD FOREX Daily Chart

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:

EURUSD EUR/USD Euro Dollar Fibonacci

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.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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