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EUR/USD pending breakout to new monthly high.

EUR/USD pending breakout to new monthly high.

Walker England, Forex Trading Instructor


Market Condition: Pending Breakout

Target 1: 2x ATR 1.1187

Target 2: 4x ATR 1.1393

Invalidation: 1X ATR at 1.0878

EUR/USD 1Day Chart

(Created using Marketscope 2.0 Charts)

Last Friday the EUR/USD broke out to a monthly high and advanced as much as 465 pips. However, so far in this week’s trading, prices have failed to breakout to a higher high. As prices continue to consolidate under the December high at 1.0981, traders looking for a continuation of this bullish trend may begin planning for a breakout above this point. In the event the EUR/USD trades to a new high, ATR can then be used to measure potential take profit points. Currently, daily ATR measures 103 pips. Using 2x daily ATR, initial targets for the EUR/USD would be located at 1.1187. While traders looking for a 4x ATR extensions for the pair can begin targeting a move toward 1.1393

In the event of a false breakout, traders should have a plan to manage risk. If prices fall back below previous resistance (1.0981), traders using a 1x ATR stop may places orders to exit the market near 1.0878. In this scenario, traders should reconsider the current bullish momentum behind the EUR/USD and reevaluate the markets chosen direction.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.