Forex Trade Signals and Setups Feb 7th
EURUSD – Breaks The Stalemate
After holding the 180pip+ range for the last 12 days, the EURUSD has finally broken the stalemate. We actually just wrote yesterday pointing out some intraday clues as to why we thought it would break out north and this scenario ended up playing out.
What should be noted from a price action perspective is the nature of the breakout and the key points to be noted;
1) Take a look at the last 3 candles prior to the big impulsive candle labeled 1, 2 and 3. Notice how they held a virtual straight line in the sand below? This was communicating the bulls were absorbing the offers yielding almost no ground. This was the first clue the breakout was likely going to be north.
2) The second clue has to do with the fact this was done in the middle of the range. This was communicating the bulls were confident enough to buy the pair at a worse price (not at range support) but were confident they could hold the line, so they bought it higher up.
3) Lastly, the breakout bar. This was an impulsive candle suggesting massive participation on the bulls part. In fact, this is the largest bull candle on an open to close basis.
The bulls most likely took out any stops and we suspect this is a sustained break as a look at the intraday price action in the chart below suggests price is holding well above the prior resistance and closing near the highs. This tells us there was little profit taking so we expect this market to continue north.
Traders can look for a breakout-retest setup on the 1hr time frame and watch for a price action trigger to get long there, targeting 1.3330 and 1.3415. Stops should be towards 1.3150 which offers a nice R:R (Risk-t0-Reward) ratio.
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