Forex Signals - EUR/USD Caution Advised

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11-14-08

3:26a GMT - EUR/USD shot upwards today, busting through all resistance levels in its way. No bearish reversal signals were given though so no shorts were taken and we stayed out of a bad position. With that latest push we have mixed signals for the EUR/USD. Yesterday’s 350-point rally formed a nice flag pole and we have a near text-book consolidation flag pattern off the top of that flagpole. That would indicate a return to the updside. But if you look at the top yellow trend line, just above price action, we can see that the pair is still well within that resistance level.  Upside is favored, mainly because I trust the flagpole signal more than I trust the trendline. As we approach the weekend however, no trade at all might be the best trade for now :).

Trading Idea: there are two trading methods to consider here. First is a return above 1.2890 would be a very bullish signal and we could wait for a break of that to confirm the trade. Or  we could look for bullish reversal signals around former resistance (and now support) at 1.2650. Long targets favored at 1.2865, 1.2930 and 1.3000.

(click to enlarge)

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Forex Signals - EUR/USD Gap Trade; Selling Rallies »« Technical Analysis - EUR/USD Still Selling Rallies