EUR/USD Technical Analysis - EUR/USD Trading: 2015-03-18

Preparing for Fed meeting

We would like to focus your attention to the EUR/USD currency pair. The euro has tumbled almost 25% without any significant retracement movements since May 2014. It was caused primarily by two factors. The expected euro printing as a part of the “quantitative easing” program launched by the ECB, as well as the planned Fed rate hike. The first event has already taken place: this March the ECB has announced the start of the bond-buying program in the amount of 60 billion euro spent monthly. This program will run until September 2016. An old trader saying “Buy on the rumor, sell on the news” worked partially, and now the euro is slightly rising. We don’t rule out the possible continuation of that rising if the Fed drops a hint that there is no need in the prompt rate hike.

EUR/USD showed a strong bearish move on the H4 chart. Now there is a slight retracement movement observed on the chart. There is a possibility of the technical analysis pattern formation called “double bottom”. RSI-Bars oscillator indicates the bullish divergence: it is located above 50. We do not rule out the bullish momentum being developed after the breakout of the fractal high and Donchian Channel upper boundary at 1.0683: this level may be used for placing a pending buy order. Stop loss is to be placed at the level of the Donchian Channel lower boundary and local fractal low, which can currently act as a support line at 1.0461. After pending order placing, Stop loss is to be moved every four hours near the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets stop loss level without reaching the order, we recommend cancelling the position: market sustains internal changes which were not considered.

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