Last month I shared with you a trade setup for a single currency against the Fiat King. There were two charts posted: one was showing the global map and the other one was dedicated to the short-term trade setup.
You could have booked around 1.9% or more than 200 pips by the end of the March of my earlier trade idea, where I recommended buying the euro on the dips below 1.23. The ultimate target was set according to the Fibonacci ratio projections between the $1.2647 and the $1.3139 per 1 Euro. The risk was limited below the $1.2150, and it was not materialized since then.
Indeed, the Euro dipped below $1.23 down to the $1.2240 area as planned. But on the move to the upside, it only advanced as high as $1.2477 on the 27th of March still gaining more than you could have risked. The EUR/USD couldn’t overcome the earlier top beyond $1.2556, and it retreated after that.
In this post, I updated the EUR/USD chart for you as the short-term chart structure has changed and it offers another trading opportunity.
Chart. EUR/USD Daily: Triangle Offers New Buying Opportunity
Seasoned traders wouldn’t be surprised that the Euro dropped again after the failure to break above the top of consolidation as I warned you many times before that consolidations are tricky. This time it transformed from the simple zigzag into something more complicated and time-consuming.
The price is very close to the apex part of the Triangle, and therefore we should be ready for the imminent explosion of the pattern. The drop occurred last Friday hit the $1.2250 low, and it almost reached the downside of the Triangle at $1.2240. The candle of that day has a long lower shadow showing the rejection as the price closed nearly 40 pips above the low.
The new setup is quite simple – another dip or even the level around the Friday’s close ($1.2286) could be a good opportunity to go long the Euro against the Dollar as another rally is anticipated. The target is set at the distance of the widest part of the pattern (400 pips) added to the breakout point ($1.2400) and is equal to $1.2800. It’s more than a 4% gain, and it could be a good bet as the risk is much smaller if we would cover long below the previous low at $1.2214. The risk/reward ratio = 7 and it is outstanding.
The target is within the uptrend channel that was built using the current low as the second touch point. It is a good sign showing that the price objective is quite conservative.
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.