Short term
Trade view / 13 July 2015 at 0:18 GMT

Recovery opportunity for EURUSD

Managing Director / Technical Research Limited
New Zealand
Instrument: EURUSD
Price target:
Market price:
Background

All eyes are focused on Greece, with the European Union having given it 72 hours to win its trust by passing Bailout Laws. The ball is very much in the hands of Prime Minister Alexis Tsipras and his parliamentary colleagues on Wednesday. 

There is also a busy data week ahead with US June retail sales on Tuesday followed by industrial production on Wednesday. On Friday, we will receive a clearer reading on the US inflation situation with the release of the June consumer price index data.

For a more detailed summary, refer to my article today: Band-Aid not enough to heal Greece's wounds.

Management and risk description

The euro rallied nicely on Friday and its subsequent reaction is seen as corrective and has probably ended (just moments) ago at 1.1085 in early trading on Monday morning.
 
Therefore, while holding near support at 1.1100/1.1085, I'm looking for the resumption of euro's recovery back toward Friday’s 1.1215 high, en route to the 1.1300/1.1330 resistance area.

In a wider context, the euro's price action since this year’s mid-May peak of 1.1465 is best seen (at this stage) within the context of a developing multi-week Triangle consolidation (refer daily chart below). Once the 1.1300/1.1330 target is reached, short-term risk will then shift to the downside.

Parameters

Entry: Buying EURUSD at market (currently trading about 1.1130)

Stop: 1.1083, initially

Target: 50% at 1.1268 and 50% at 1.1308
 
Time horizon: allow a few days for both targets to be met

EURUSD daily chart (click to expand)
EURUSD daily chart
 Source: ThomsonReuters   

EURUSD weekly chart (click to expand)
EURUSD weekly chart

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more.

— Edited by Gayle Bryant

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