EUR/USD Bullish Bias Triggered on Rally above 1.3075
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
FOREXAnalysis: Keep the 1.2875 level in mind if the EURUSD trades below 1.2962 but the rally above 1.3074 suggests that a recovery into 1.3300-1.3400 is underway (1.3247 and 1.3433 specifically). The decline from the 1.3711 is impulsive (5 waves) so the larger trend has probably turned down (by larger I mean headed back to the 2012 low) but a recovery into 1.3350-1.3430 (former pivot and Fibonacci levels) would be well within the confines of a normal correction in the 2nd or B wave position. If the described interpretation is correct, then the rally probably consumes most of March. As a correction, the path of the rally could take one of several forms (zigzag, flat, or complex combination). The various possibilities makes for a slightly more difficult trading environment but 2nd (or B) waves are usually sharp and deep (zigzag).
FOREX Trading Strategy: The rally above 1.3074 turned me bullish (see volume too). Although the larger trend is probably down, risk on longs is manageable and there is enough room on the upside to be bullish. I like buying dips into 1.3040/70 with a stop under 1.2960, 1.3250 first target, and open second target.
LEVELS: 1.2875 1.2963 1.30431.3161 1.32501.3305
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.