EURUSD Breakout

Finally the EURUSD breakout has occurred.



I'll be looking for a pullback to the resistance level, with buying opportunities in a zone between 14,360 and 14,460, subject to further analysis.

Here is the breakout in close-up - notice that price hit a price target level at 14,632 which is a monthly pivot level - even though I am a month behind on updating my pivot levels.

EURUSD

In my last post I showed EURUSD at a critical price level. Since then, price has made a couple of failed breakout attempts, and has been pushed backwards by the surprising announcement from the Bank of England to increase the levels of quantitative easing. However, positive economic reports keep being delivered to the market - there are no signs of momentum weakening, and a bullish breakout is still on the cards.

Live Divergence Trade

Well, I haven't been writing much in this blog recently, so as penance I thought I would log a trade that is a live setup at the moment. EURUSD has formed a divergence pattern. Price has made new highs, but they are not matched by new highs on the RSI indicator.



As I am writing this my entry point (short) has just been triggered. The setup is based on fibonacci retracement levels. My entry was at the 23.6% level (1.3643) with a target exit price at the 123.6% extension level (1.3532).



Tomorrow I'll give an update on how this trade performed.

Trade of the Day

Below is a 4H chart for EURUSD.



Usually I wait for price to breakout of the ranges indicated by the green and red levels. In particular, for EURUSD I would wait for a break short through the red level. However, The innediate price action was bullish, and this was supported by divergence on the chart. So I decided to take the bounce from the support level and look for opportunities to go long. Short time frame tick charts gave me the chance for a pullback as shown below:



Entry worked perfectly at the 61.8% retracement level giving me an entry price of 1.3187 with a stop of 22 pips. I scaled-out at 1.3198 giving me a breakeven trade. However, price failed to make a new high. But what was forming was a breakout trade setup. Here it is on a 15 minute chart:



Since I was already at breakeven I was able to trade the breakout without increasing my overall risk exposure. The breakout was spectacular!