EURUSD Trading Strategy: Capitalizing Over the Right-Hand Shoulder

EURUSD Technical Analysis

EURUSD posted moderate weakness in the Forex market following the European Central Bank (ECB) chairman Mario Draghi’s Quantitative Easing (QE) measures.  We have been mesmerized by the Japanese  ‘Inverted Hammer’ on the monthly chart near a firm support level.  Interestingly enough, FX traders reacted positively to the news the ECB council is displeased with Mario Draghi, which was interpreted to a fair rally in Euro-Dollar.

Similar to our Dow Jones technical analysis, we are using the 4hr chart for our long entry in EURUSD. The market has painted a reversed Head-And-Shoulders (H&S) where the right-hand shoulder was recently affirmed at the time of this writing. Due to the length of the shadow, a deeper retracement towards 1.2459 cannot be negated but does not disturb the bullish projection for EURUSD.  Our trading strategy is based on multiple time frames to ensure a decent Risk Ratio (RR) is maintained.

EURUSD 4hr Chart

Please click on the chart to enlarge:

EURUSD Trading Strategy, 5 November 2014

EURUSD 4hr Chart 05/11/14

The location of the protective stop loss order was a difficult decision.  Based on the monthly chart, the stop loss order should be placed at 1.2391, approximately +100 pips stop. However, as the analysis is based on the 4hr chart , we have decided to dismiss the monthly stop and set the order at 1.2412. The bullish target for our technical strategy is at 1.2660.

Updates regarding EURUSD trade will be published at the bottom of the analysis. Bookmark this  page or subscribe to DDMarkets.com to be notified when a trade update is made. You may refer to our education section to expand your knowledge in global markets. Streaming market news are available at the homepage.

EURUSD Trade Details

EURUSD long @ market price
Take profit: 1.2660
Protective stop: 1.2412
Estimated duration: 48 hours
Risk Ratio (RR): 1 : 3 (approx.)

We will monitor EURUSD 4hr chart and  to ensure our technical analysis is inline with our technical models.

06/11/14 UPDATE: EURUSD is trading at 1.2517 at the time of this writing. We are closing 20% of the long trade at market price.

06/11/14 UPDATE: EUERUSD is trading at 1.2527 at the time of this writing. We are shifting the protective stop to the entry and close 15% of the long trade at market price.

EURUSD Trading Strategy: Capitalizing Over the Right-Hand Shoulder
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EURUSD Trading Strategy: Capitalizing Over the Right-Hand Shoulder

                                             EURUSD Trading Strategy: Capitalizing Over the Right-Hand Shoulder

EURUSD Trading Strategy: Capitalizing Over the Right-Hand Shoulder

Last Updated on July 2, 2017