EURUSD: Will a correction in the US dollar even help the pair avoid revisiting towards 1.04 or lower?
The medium term daily candle chart below shows the price history of the Euro currency (EUR) versus the United States Dollar (USD). This currency pair is known as EURUSD, and is trading near 1.0884 around time of publication today.
On March 19th when the EURUSD was last reviewed in Ideas You Can Trade, high volatility was resuming yet stabilized and the pair lifted back towards its upper range under 1.1035 but not able to trade much higher in recent days.
Since failing to hold above 1.1050 earlier today- even as the US Dollar retreated against other major currencies, the EURUSD seems to be struggling under enormous bearish pressure - also coinciding with the upper line of the bearish channel as can be seen in the chart below (see upper line of purple bearish channel).
If this bearish channel is re-entered, the EURUSD should revisit near its March low above 1.04 and where a double-bottom may be tested (which if failed could aim the pair towards parity in the weeks ahead - and as the additional long term monthly candle chart below depicts).
On the other hand, the prospects of a deeper US Dollar correction could help the EURUSD avert or delay the above-mentioned bearish fate at least in the short-term, and therefore traders may watch both if the channel is entered and whether the US Dollar rebounds.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1051 with a Limit to take profit @ 1.1239 and a stop-loss @ 1.0871 Risk/Reward Summary: Limit risk = 188 pips profit / (-180) Stop-loss risk = Gain to Loss ratio = 1.04
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.0845 with a Limit to take profit @ 1.0655 and a stop-loss @ 1.1032 Risk/Reward Summary: Limit risk = 190 pips profit / (-187) Stop-loss risk = Gain to Loss Ratio = 1.01
Medium term daily candle chart (Zoomed-in):
Long term monthly candle chart: