EURUSD Forex Short-Term Uptrend – Oct 21, 2014

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EURUSD Forex Short-Term Uptrend - Oct 21, 2014

EURUSD Forex Short-Term Uptrend - Oct 21, 2014EURUSD is moving in a short-term uptrend since the ascending trend channel on its 1-hour time frame is still holding. Price is making its way to the channel support near the 1.2750 minor psychological level, which might continue to hold as a floor.

Stochastic is moving out of the oversold area, with a shallow bullish divergence indicating a possible bounce. If that happens, EURUSD might make its way back to the top of the range near the 1.2900 major psychological level. MACD is also reflecting a potential return in buying pressure.

EURUSD Forecast

In addition, the SMAs are in line with the channel bottom, reinforcing the potential support. If this is broken though, it could be a sign that EURUSD is in for a downtrend and may be due to test the previous lows at the 1.2500 levels.

Going long EURUSD at 1.2750 with a tight stop and a target of 1.2900 could work for a technical trade. If you’re bearish on this pair, you could wait for a downside break of 1.2700 and aim for the lows near the 1.2500 area.

Event risks for this EURUSD setup include the upcoming PMI releases from Germany and France. These are expected to show deeper contraction or slower expansion, which might be bearish for the euro. Bear in mind that the ECB is considering further easing efforts in order to avoid another recession, but it looks like most economies and analysts are already pricing in negative growth from the region.

As for the dollar, the recent switch in FOMC bias has proved to be bearish for the currency, although risk aversion could continue to keep the lower-yielding safe-haven currency afloat. After all, data from the US economy hasn’t been so bad and has been relatively better compared to other major economies. There are no top-tier reports due from the US today.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.