Daily Analysis: Trading opportunities for the EURUSD in the short term

The EURUSD fell yesterday after the positive news from the US. Now, the pair is coming closer to a critical support level at around the 1.3660/50 area. The 20 day moving average also sits around the same levels, as can be seen in the daily chart shown below. There can be two ways to trade in the short term.

First, there is an up-move trend line, as plotted on the 4 hour chart shown below. There is also a support at around the 1.3650 level. If the pair breaks the trend line and support, and closes below it, then we can jump into a sell trade. Remember, we need a convincing break for this scenario to be valid. Initial target should be around the 1.3600 level, and final target could be around the 1.3560 level. Stop should be placed above the broken trend and support level.

Another possibility is that the pair moves slightly lower from the current levels and creates a double bottom. If this happens and once a bullish divergence is formed, then we will jump into buy trade. Initial target should be around the 1.3710 level, and final target could be around the 1.3750 level. Stop should be placed below the last low created.

Reviewing yesterday’s events and trades
Yesterday, the US dollar was seen gaining some ground, as the economic data which was released in the US came better than expected. The US new home sales data registered a massive 9.6% gain, which is around 10.0% more than expected. The EURUSD and GBPUSD traded lower after the release. The EURUSD was a major mover, as the pair broke an important short term range and traded lower. Other than this, in the Asian session, the Australia’s capital expenditure and trade balance data were released. The expenditure figures were on the disappointing side, which resulted in a decline in the AUDUSD.

Fundamental Outlook for the day
Today is an important day as the Fed chairman Janet Yellen is scheduled to testify during the NY session. We need to be very careful trading around this event, as it might cause some swing moves in the market. Furthermore, a lot of economic data are lined up in the European and NY session. In the NY session, the US core durable goods orders data, initial jobless claims and KC fed manufacturing figures will be published. Other than this, in the next Asian session, the Tokyo’s CPI data will be released. So, we can expect a lot of swing moves in the coming sessions.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, NZDUSD, AUDUSD, AUDNZD, USDCAD, EURCHF, GOLD and OIL.
Get it HERE: Vladimir’s Markets Forecast

Trade carefully friends. Happy trading!

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