Medium term
Trade view / 26 August 2016 at 7:40 GMT

Still long in EURUSD looking for a breakout

Analyst / PIA First
United Kingdom
Instrument: EURUSD
Price target:
Market price:
Background

USD Index – We are always looking for a bias to give an ‘indication’ of the next direction. Going into Janet Yellen’s speech today at Jackson Hole is always going to be high risk, but as noted on numerous occasions, these events offer the best rewards. 

Three factors that offer a downward bias in the USD index:

     1. Daily chart highlights a corrective channel formation. The bias is to break lower.

     2. 30 minutes highlights a symmetrical triangle formation. Because the move into this
         pattern was negative, it has a bias to break lower. Support seen at 94.36.

     3. Descending triangle breaking to the downside. Measured move is 94.26, a break of the 
         aforementioned support. 

USD Index Daily - Corrective Channel
USD Index D
Source: Saxo Bank

USD Index Intraday - Symmetrical Triangle 
USD Index 30
Source: Saxo Bank

I am long both EURUSD and AUDUSD and now have a protective stop on EURUSD close to entry. Here I explain why I have taken this trade. 

Monthly – For 19 months we have been stuck in a range (1.7114-1.0461). There is no indication of an impending breakout. The eventual bias is to break to the downside.

Eventual bias to the downside
EURUSD M
Source: Saxo Bank

Weekly – We highlight a bullish Outside Bar from Ichimoku Cloud support. No clear indication of a change of trend. The triangle top is seen at 1.1570
EURUSD W
Source: Saxo Bank

Daily – Paused and corrected lower from the Fibonacci confluence area of 1.1348-1.1356. Because of the speed of the last rally, we look for this to be a bullish Elliott-Wave count. The last move lower was a fourth-wave correction that stalled and reversed at the trendline support of 1.1260 (where we took our long trade). The target ‘area’ is seen at 1.1570-1.1631.

Targetting beyond 1.15
EURUSD D
Source: Saxo Bank 

Intraday (one hour) – Shows the AB=CD formation completed and we are starting to move higher. I don’t expect an impulsive move to the upside during the European hours as the market is waiting for Yellen. A break of the corrective fourth-wave channel at 1.1340 confirms the aggressive last wave higher is underway.

I have a stop at 1.1240 (25 pips) so the risk/reward is very substantial (if I can manage to hold on and don’t get taken out from market during the speech).

Potentially high-risk reward
EURUSD 1
Source: Saxo Bank 

Management and risk description

On a move through 1.1340 we move stop to entry.

Parameters

Entry: long at 1.1265.

Stop:1.1240.

Target: 1.1570-1.1631 zone.

Time horizon: long from Wednesday - target estimated at 7-10 sessions depending on how strong the USD bias is 

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
26 August
Rofhiwa Thomoli Rofhiwa Thomoli
Nice one
26 August
bancodemon bancodemon
Hi Ian, have you got any TP targets for your sell orders? thanks
26 August
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
They are both buy trades; AUDUSD long at 0.7633 stop at 0.7590 target 0.7790 / EURUSD long at 1.1265 stop at 1.1240 target area 1.1570-1.1631 zone
26 August
bancodemon bancodemon
thanks
26 August
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I have a stop at 1.1240 (25 pips) so the risk/reward is very substantial (if I can manage to hold on and don’t get taken out from market during the speech).

I knew it !!!!!!! Hate these major news events
26 August
Armando_c Armando_c
The FED seems almost as clueless as the Japanese are, just whatever, gonna see later...
26 August
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
think that says it all
26 August
AlexF AlexF
: ) tough one to navigate
26 August
AlexF AlexF
could manage a decent trade on usdjpy out at 100.43 what is your view from here
?
26 August
AlexF AlexF
sorry 101.43

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