EUR/USD Next Pending Breakout
Market Condition: EUR/USD Breakout
Target 1:______2X ATR at 1.1408
Target 2:______4X ATR at 1.1548
The EUR/USD has traded to new yearly highs at 1.1268 to start this week’s trading. This move has coincided with an extreme in sentiment, with IG Client Sentiment reading at -2.62. With 72% of traders net-short, this may suggest that the EUR/USD is prepared to trend higher. Traders should note that graphically the EUR/USD has moved through our first target for the pair at 1.1154. Traders entering the market on an initial breakout above 1.1024 may now look for the secondary target at 1.1284.
Why and how do we use IG Client Sentiment in trading? See our guide.
Traders may also consider entering the market on a fresh breakout above 1.1268. Daily ATR for the EUR/USD is currently 70 pips, so a 2X ATR profit target may be considered at 1.1408. A 1X ATR stop loss may also be considered at 1.1198 to create an initial 1:2 risk reward ratio. In the event that the EUR/USD fails to breakout higher, traders should look for the pair to decline back below its 10 day EMA (exponential moving average) at 1.1121. A move below this price would suggest a short term change in momentum for the EUR/USD. In this bearish scenario, traders may elect to delete any pending entry orders and look for opportunities elsewhere.
--- Written by Walker, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.