Daily Outlook: EU has made an incredible recovery over the past 24 business hours, beginning on Friday and continuing strong into today with a sustained break above 1.4500 on the hourly charts.
With price currently around 1.4540 the pair has made a series of higher highs and higher lows since Thursday, starting with the 1.4350. Despite a brief (but large) drop on Friday due to thin market conditions and Bernanke's dovish words, the pair has basically been bouncing along on a rising trend support line (blue line above) that we are currently viewing as a key support and where we will look to enter long. The sustained break above 1.4500 is very significant as well because the level has been acting as resistance for months, however it has broken this level and returned to the downside twice in July and more so in June.
Trading Idea: To take advantage of this recent bullishness we will look for candlesticks and dips to get long on above the rising trend support line (blue line). Currently this means on a dip to 1.4450-1.4475 support zone with targets (from 4450) at 4475, 4500, 4530 and 4560 for 110 pips potential.
We will also look to take an aggressive short on a sustained break below 1.4450 with targets at 4425, 4400, 4370 and 4340 for 110 pips potential.
Happy Pipping :)