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Scalping the EURUSD: Breakout or Fakeout?

Scalping the EURUSD: Breakout or Fakeout?

2014-03-10 21:18:00
Michael Boutros, Strategist
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Talking Points

  • EURUSD March opening range breaks to the topside- bullish
  • Key resistance- 1.3895- Bearish invalidation
  • Weekly opening range forming just below

EURUSD Weekly Chart

Forex_Scalping_the_EURUSD_Breakout_or_Fakeout_body_Picture_3.png, Scalping the EURUSD: Breakout or Fakeout?

EURUSD Daily Chart

Forex_Scalping_the_EURUSD_Breakout_or_Fakeout_body_Picture_2.png, Scalping the EURUSD: Breakout or Fakeout?

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURUSD Breaches key resistance 1.3800/30range - bullish
  • Breach opens up targets at 1.3895, 1.3946 & 1.40
  • Subsequent topside objectives at- 1.4074, 1.4150 & 1.4230
  • Weekly opening range in focus
  • Daily RSI hold 60-breach suggests topside remains in focus
  • Momentum support trigger pending
  • Support at 1.3800/30, 1.3767 & 1.3706- bullish invalidation
  • Key Events Ahead: Comments from the ECB President Draghi on Wednesday & US Retail Sales on Thursday & Michigan Confidence on Friday

EURUSD Scalp Chart

Forex_Scalping_the_EURUSD_Breakout_or_Fakeout_body_Picture_1.png, Scalping the EURUSD: Breakout or Fakeout?

Notes: The EURUSD made a decisive break above the 1.3800/30 threshold noted last week- “a level of technical significance that is defined by the 100% extension if the July 2013 advance and the 61.8% retracement from the decline off the 2011 high. This region has caught the monthly high closes for all three of the last major rallies seen in October, December and February. A longer-dated trendline resistance dating back to the 2008 high also converges on this range and if compromised, would suggest that a more meaningful low was put in last month.”

A breach and weekly close above this level has now shifted the medium-term outlook back to the topside. The weekly opening range is forming just below key interim resistance at 1.3895 and we will look for a break of this range to validate our near-term scalp bias. Ideally looking for a fresh weekly low to buy into, but we we’ll respect a break/close above 1.3895 with such a scenario targeting subsequent resistanceobjectives towards the 1.40-handle and above.

Bottom line: the broader bias remains weighted to the topside while above 1.38 with only a break below 1.3706 invalidating this particular setup. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Bearish Invalidation

Daily / 30min

1.3892/95

61.8% Retrace / 1.618% Ext / Weekly ORH

Break Target 1

Daily / 30min

1.3933/46

78.6% & 100% Extension(s)

Break Target 2

Daily / 30min

1.4000

Big Figure / Psychological Barrier

Break Target 3

Daily / 30min

1.4066/75

100% & 138.2% Extension(s)

Break Target 1

Daily / 30min

1.4113

161.8% Fibonacci Ext

Bullish Invalidation

30min

1.3850

61.8% Ext / Friday Low / Weekly ORL (1.3860)

Support Target 1

Daily / 30min

1.3822/30

61.8% Ext / Feb High / 61.8% Retrace

Support Target 2

Daily / 30min

1.3800

61.8% Retracement / 100% Ext

Support Target 3

Daily / 30min

1.3767

100% Fibonacci Ext

Support Target 4

30min

1.3711/20

Thurs Low / Pivot / March Low (1.3706)

Support Target 5

30min

1.3689

61.8% Extension

Support Target 6

Daily / 30min

1.3641/43

61.8% Retrace / Feb 27 Low / 100DMA

Average True Range

Daily (20)

72

Profit Targets 16-18pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars on Wednesday & Thursday morning this week on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)

Interested in learning about Fibonacci? Watch this Video

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