Market Condition: Breakout
Target 1: 1x Reference Bar Extension
Target 2: 2x Reference Bar Extension
Invalidation: Continued Consolidation
EURUSD 1Day Chart
(Created using Marketscope2.0 Charts)
The EUR/USD has continued its consolidation through this morning’s trading and has failed to breakout from Wednesday’s reference bar depicted above. Traders watching this inside bar pattern develop, have the opportunity to wait for a breakout of either support or resistance to initiate new positions in the markets chosen direction. Current support for the pair is found using Wednesdays low which is found at a price of 1.0896. Resistance is found at the daily high at a price of 1.1095. In the event that a breakout occurs, and consolidation for the EUR/USD is concluded, traders can begin targeting a 1x extension of the previously mentioned 199 pip reference bar. This places initial targets at either 1.1294 or 1.0697, for a bullish or bearish breakout respectfully.
In the event that the market fails to breakout from support and resistance, traders have the option of trading the continuing range bound market conditions. In this scenario, any breakout scenarios would at least be temporarily suspended as prices continue to consolidate.
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