EUR/USD Double Bottom Back In Play
Shain Vernier • 1 min read
Slow forex action has dominated today’s U.S. session. Tight trading ranges have been the rule, with the Greenback posting a near-flat mixed performance against the majors. As we approach the halfway mark of the trading day, equities are in consolidation, with GOLD and WTI crude oil garnering the attention of most short-term traders.
As May rolls toward its conclusion, the June 19 FED Meeting is quickly coming into view. The CME FEDWatch Index is projecting a 90% chance of rates being held static at 2.25-2.50%. This is in line with the FOMC’s “patient and flexible” policy. However, according to the CME FEDWatch, things are likely to change in September. The odds of a September ¼ point rate cut sit at 44.8% and stay in the 38%-44% range until year’s end.
If nothing else, investors are anticipating that the FED will become increasingly dovish as 2019 wears on. Only time will tell if they are correct.
EUR/USD Nears Daily Double Bottom
Last week, I pointed out the presence of a daily Double Bottom pattern near April’s Low (1.1110) in the EUR/USD. Rates are once again approaching this area as if it were a magnet.
Here are the levels to watch going into the Friday session:
- Resistance(1): Daily SMA, 1.1175
- Support(1): Double Bottom, 1.1110 – 1.1107
Bottom Line: Today’s intraday low at 1.1116 served as a proximity test of the Double Bottom pattern. If we see the ultra-tight 27 pip range extended to the downside, a long from the vicinity of 1.1110 is solid trade location.
Until elected, I will have buy orders queued up from 1.1109. With an initial stop at 1.1074, this trade produces 35 pips on a near 1:1 risk vs reward management plan.