Thursday, November 25, 2010

EUR/USD Weekly, Very Important Support


We are at a very important support level right now on the Eur/Usd on a Weekly timeframe:
  1. The Weekly 20SMA and 50SMA Neck Tie. Of which, the 20SMA is Ascending, which can make for a good "Bump and Run" Type play. The Target would be upwards of 1.50-1.60 over the course of 2-4 Months.
  2. We are also at the bottom trend-line of what looks to be a symmetrical triangle. A hold of this support line over the next 1-2 weeks is imperative for the Eur/Usd to maintain its upward momentum that is has seen since June 2010.
  3. We also have the support of our previous breakout level at 1.3334. So far, the E/U has bounced directly off of the level but is lacking momentum/conviction due to the US Holiday Week.
  4. The ideal scenario is for the E/U to put in a reversal candle after next week, in which the candle has a rather long tail underneath and closes up for the week above our lower trend line.
  5. A buy on the reversal of this candle, being patient to wait for the close before a full position is taken, would yield an excellent risk/reward trade. I am looking to enter around the 1.34-1.3450 area (1/3rd Position) during the middle of next week ( Week:11/28/2010-12/03/2010). I would like to enter into 2/3rds of my total position towards the end of Friday next week if  we look like we will be closing on the highs of the week. I would enter the remaining 3rd position during the following week.
  6. ENTRY: 1.34-1.36 on weekly reversal candle
  7. STOP: 1.3086 on close below the 38.2% fib retracement from the November 2009 High's to the June 2010 Low's.
  8. TARGET 1: 1.3950 which is around the Weekly 200SMA and the 61.8% Retrace Pivot Point.
  9. TARGET 2: 1.4282 which is the most recent pivot high.
  10. TARGET 3: 1.5144 which is the pivot high of November 2009 and 100% retrace off the lows of June 2010.
  11. TARGET 4: 1.6039 which is the high pivot from October 2008.
  12. A trade that will take plenty of patience but offers tremendous room for upside with limited downside risk. 

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