Forex Technical Update
The EUR/USD fell sharply without any significant pullback after the double top. It is now approaching an important support cluster seen in the 4H chart. At about 1.3165, we have 61.8% retracement of the 1.2970-1.3482 bull run in the second half of February. Slightly lower is a rising trendline that connects the 1.2970 low with Jan's low of 1.2620. The 4H 200 simple moving average is also just under 1.3165.
What is the reward-risk assessment of a buy from 1.3165? Let's say an entry is at 1.3175, and a stop is below 1.3150, say 1.3130, risk would be 45 pips. 1.33 and then 1.34 are potential targets to the upside and as the market makes higher highs and higher lows in the 4H chart, these are actually conservative targets. With 1.33, there is a 125 pip reward and 1.34 offers 225.
The 1.33 target therefore offers 125:45, which is just under 3:1, and 1.34 offers 225:45, which is 5:1. If the market does bounce from the 1.3165 area, note that 1.3250 is about 61.8% retracement of this week's slide, another retracement target, which offers 275:45, or about 3.88:1.
A break below 1.3250 could open up 1.30.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.