Quote of the day:“Strong reasons make strong actions.” – William Shakespeare
Good morning. The consolidation near resistance at 1.4400 is over and the euro continues to climb higher towards 1.46-1.47 resistance zone, as pointed out in my post yesterday. The rally is caused by a weaker dollar, as the greenback is in free-fall mode against the CHF and JPY on debt debate. We can expect some more upside action towards previous 2 tops – at 1.4550 and 1.4700, on the way to the top side formed in the beginning of May. However, after such breakouts it’s a common thing to see a pullback to retest the former resistance zone, therefore I am considering buying opportunities on potential retrace to the breakout area around 1.4400 – preferably tomorrow, after today’s close above the said level since I don’t want to deal with a daily reversal candle. The US New Home Sales is one of today’s most important events in the Economic Calendar.
Trading strategy: looking to buy on pullback to 1.4420, initial stop at 1.4360 (0.5% risk), target open
Support: 1.4400, 1.4330/50, 1.4250, 1.4200, 1.4150 and 1.4100
Resistance: 1.4500, 1.4600 and 1.4700
Market sentiment: long term – mixed, medium term – bullish, short term – bullish, intraday – bullish
The 240-minutes chart looks even more bullish than the daily and it’s quite clear that the rally won’t stop here – just look for more dollar weakness on debt-ceiling fears in the next few days
Other interesting setups: