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EURUSD Scalp Setup Favors Buying Dips While Above 1.3830

EURUSD Scalp Setup Favors Buying Dips While Above 1.3830

2014-04-10 21:17:00
Michael Boutros, Strategist
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Talking Points

  • EURUSD breaches weekly/monthly opening range highs
  • Broader picture looking for a new high to complete 5-wave correction pattern
  • Immediate scalp bias bullish above 1.3830

EURUSD Daily Chart

Forex-EURUSD-Scalp-Setup-Favors-Buying-Dips-While-Above-1.3830_body_Picture_2.png, EURUSD Scalp Setup Favors Buying Dips While Above 1.3830

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURUSD breaks above April opening range high / 1.3800/30 resistance- constructive
  • Holding within the confines of an ascending Andrew’s pitchfork dating 3/2013
  • Interim resistance 1.3893- Breach targets objectives at 1.3946, 1.40 & 1.4074
  • Support at 1.3830, 1.3800- bullish invalidation
  • Break targets support at 1.37 & 1.3657/63
  • Daily RSI rebound ahead of 40- bullish
  • Pending momentum trigger with breach above 60-threshold
  • Event Risk Ahead: University of Michigan Confidence Survey Tomorrow

EURUSD Scalp Chart

Forex-EURUSD-Scalp-Setup-Favors-Buying-Dips-While-Above-1.3830_body_Picture_1.png, EURUSD Scalp Setup Favors Buying Dips While Above 1.3830

Notes: An early break of the weekly and monthly opening ranges have shifted our focus to the topside on the euro with a break above the 1.3800/30 resistance range warranting long exposure. We have been targeting this key resistance zone since last year’s initial attempt back in October with the start of March trade once again highlighting this region as the monthly opening range took shape just below.

The start of April trade was very similar in that the pair was once again opening the month just below this key resistance range. A rebounded off key support at 1.37 early this week- (a level defined by the 78.6% extension off the 2014 high and Andrew’s pitchfork support)- and a subsequent breach above the monthly high / 1.3800/30 once again shifts the scalp bias to the long-side of EURUSD.

Bottom line: we’ll continue to favor long scalps while above 1.3830, with only a break below the 1.38-handle invalidating our near-term bias. Note that ongoing divergence on the intra-day chart does suggest that the pair may be a tad stretched here with the last four times the pair rallied for 4-consecutive days offering minor pullbacks before resumption of the broader trend. Our immediate focus is lower against the 1.39-handle heading into next week and we’ll look for next week’s opening range to offer further clarity on our directional bias with pullbacks likely to offer more favorable long entries. Don’t put it past this thing to make a fresh high (completing a possible 5-wave ending diagonal on the daily) before turning over. 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

Resistance Target 1

Daily / 30min

1.3894 – 1.3901

61.8% & 78.6% Retrace(s) / Dec High

Bearish Invalidation

Daily / 30min

1.3933/46

100% & 78.6% Extension(s)

Break Target 1

30min

1.3964

March (2014) High

Break Target 2

Daily / 30min

1.4000

Big Figure / Psychological Barrier

Break Target 3

Daily

1.4074

100% Fibonacci Extension

Support Target 1

30min

1.3875

Soft Support / March 24th High

Support Target 2

30min

1.3852

61.8% Retracement

Bullish Invalidation

Daily / 30min

1.3822/30

61.8% Retrace / 61.8% Extension

Break Target 1

30min

1.3783

38.2% Retracement

Break Target 2

30min

1.3748

Weekly ORH / Soft Support

Break Target 3

30min

1.3721

50% Retracement

Break Target 4

30min

1.3689

Weekly ORL / Monthly ORL (1.3672)

Break Target 5

Daily / 30min

1.3657/63

61.8 Retrace / 100% Extension

Average True Range

Daily (20)

77

Profit Targets 18-20pips

*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 Monday on DailyFX and Tuesday-Thursday on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

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