The Asian and European sessions have certainly been kind to the Euro, boosting it over 80 pips against the USD. As my colleagues Rowan and Skerdian have covered in depth, the economic data out of the Eurozone came in right on schedule giving Euro traders reason for optimism.
Will the optimism prevail for the rest of the U.S. session? Only time will tell, but the technicals certainly appear to support the Euro bulls.
If you are just waking up and getting started for the day, the action has largely passed you by. But, there is a possible long entry facing the EUR/USD from the daily timeframe that may produce a few pips.
EUR/USD, Daily Chart
After a pronounced breakout, it is not uncommon to see a pullback once participation has subsided. A quick glance at the daily chart produces several observations that encourage a bullish bias:
Price has broken above yesterday’s key Fibonacci retracement level of 1.661.
Price has also broken above the Bollinger MP and the Daily SMA with considerable momentum.
A Bollinger MP/Daily SMA crossover is likely to occur during tomorrow’s forex session.
The Trade: Going long from an ideal pullback location is the play here. Buys from the Daily SMA at 1.1720 are solid entries to the bull. A 1:1 R/R long from 1.1720 with an initial stop at 1.1699 produces an upside of 21 pips.
As with most things trade-oriented, timing will be a key determinant of this trade. In the event that it is not elected during the remainder of today’s forex session, we will have a premium setup for Wednesday’s action.