EUR/USD Breaks resistance
Dailyfx | Sep 23, 2014 10:58AM ET
- EUR/USD Breaks Resistance
- Breakout Signaled Above 1.2874
- Bearish Reversal Signaled Under 1.2860
(Created using FXCM’s Marketscope 2.0 charts)
Suggested Reading: Trading Intraday Market Reversals
The EUR/USD has opened with a breakout towards higher highs in early London trading, with the release of PMI data. Data for the high importance event on the economic calendar released better than expected, pushing the EUR/USD over the R4 line of resistance at 1.2874. While price initially surged, momentum has waned pulling the EUR/USD back to the previous line of resistance. As long as price stays above this value, it would be a strong signal of continued momentum allowing traders to place orders to buy the EUR/USD.
As price with any breakout, there is always the potential for a price reversal. In the event of a false breakout, traders would first look for price to move back into range resistance located at the R3 pivot at a price of 1.2860. Once price has moved back into the trading range, reversal traders can look for price to potentially traverse the current 29 pip range back to support found at 1.2831. It should also be noted that price has the potential to break towards a lower low in the direction of the daily trend below the S4 pivot at 1.2818. In either scenario, this would indicate an end of bullish momentum drawing a conclusion to the present breakout environment.
Monday's Update
On Monday, the USD/JPY remained range bound by failing to break a new high or new low. As price traded between support and resistance, traders continued to take advantage of key reversal values. By the conclusion of trading price had again traversed the daily range, before breaking out to a new low with today’s price action. To learn more, check out Fridays FX Reversal article linked below.
---Written by Walker England, Trading Instructor
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