Revisiting the EURUSD Trade

Perhaps the biggest test for any technical analyst can come from the fact that when fundamentals either point to different market direction or when the fundamentals keep you guessing.

This weekend marks one such moment as we have the Cyprus bailout issue which again as with most past issues tend to be resolved at the last minute.

Following up the EURUSD trade, I wanted to revisit this trade set up with an idea to see things are going to play out.

EURUSD - H1 Charts - Bearish Outlook, 23rd March

Firstly, the H1 chart shows a bearish outlook as pointed previously. Price is currently trading near the 'Wave 5' zone and a drop from here should see the EURUSD on the downhill. The Wolfe Wave EPA shows March 25th.

In the chart below, we have the Wolfe Waves with Stochs plotted. Evident, price does look to fall but it isn't a confirmation yet. While the stochs managed to tip just below the 80 region, the main stochs line looks flat at this moment.

EURUSD - H1 Chart - Price Projections & Targets

From a fundamental perspective, it is likely that a resolution to the Cyprus issue could set the Euro a bit stronger, however a failure (which is highly unlikely to happen) could see the Euro plummet.

Wolfe waves tells us that price is likely to reach 1.27 regions. But as mentioned previously the price drop is just too steep. An important point to note in the chart is that price already peaked to the region where Wolfe wave projects, which is 1.301.

In terms of trading the EURUSD, we will look for price to breach 1.2978 and go short. Our stop loss would be set to 1.2995 with Take Profits at 1.2957, 1.29396, 1.29093 and 1.28637, which are key pivot points.

EURUSD - Pivot Points

EURUSD Bullish Wave continues

So after close to 12 hours later, the EURUSD price continues to be bullish despite the negative market sentiment on account of the deadlock on the Cyprus bailout issue.

However, the price target of 1.30 seems quite doubtful given the fundamentals at play. It will be interesting to see how this trade will unfold and at what price level we can expect the pair to become bearish.

Below is the EURUSD chart.. continuation from yesterday's post. As you can see, price has moved quite a distance from yesterday's entry price.

In terms of the daily resistance levels, the pair has clearly breached R1 at 1.29426. R2 is at 1.30192 and R3 at 1.30689.