EUR/USD Projections

EUR/USD Current Price: 1.3293
Daily High/Lows:

EURUSD-Oct-24-2011-SMALL

Mon Oct 3 1.3382/1.3167
Fri Sep 30 1.3602/1.3386
Thu Sep 29 1.3680/1.3520
Wed Sep 28 1.3691/1.3533

Pivots: S3 1.2952; S2 1.3027; S1 1.3102; P 1.3242; R1 1.3313; R2 1.3457; R3 1.3597

EUR/USD: The EUR/USD has been trending down, hitting a low point of 1.3167 from the initial swing high of 1.4551, and the last swing high of 1.3691 on Sep 28, 2011. These swing moves are tremendous and all we need to do as traders is to catch a slice of the pie. Since we are selling in a downtrend, the best time to sell is after price retraces. In other words, we want to sell on strength. One way to do this is to use Bollinger bands on the 4 hour chart, and sell near the upper Bollinger band in a downtrend. When price retraces to the Bollinger band, and is confirmed by an overbought situation of your choice in oscillator, that provides a double confirmation for a sell. If the angle is steep, sometimes price retraces to the 20 period moving average (the middle line of the Bollinger band) and doesn’t make it to the upper band. (See left chart.)

What kind of profit targets are we looking for? If we look on the weekly chart in the figure on the right, we can calculate a projection based on the initial move down from 1.4941 to 1.3969. the 100 percent projection from the 1.4551 level is 1.3579, which we have surpassed. 161.8%, which is the next projection level below the recent low, brings us to 1.2978. This is also significant as 1.3000 is a major big number, and S2 and S3 straddle these levels. Therefore, 1.2952 – 1.3027 should provide a major window of support for the EUR/USD.

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