The EURUSD has corrected sharply as visible in this D1 chart. Despite the continued debt contagion issues in the Eurozone the Euro remained very resilient, but the Portuguese-Greek combo sank this currency pair down to 1.2900. Additionally traders expect a positive surprise out of tomorrow’s NFP report in the U.S. which we believe will not occur. We expect the Euro to rally tomorrow after the release of the NFP data and see it heading higher and back to 1.3200.
MACD indicates stable momentum despite the sell-off and the absence of severe bearish pressures. Additionally the histogram as gaped away from its moving average and we expect the gap to close over the next few trading sessions. RSI is currently trading in oversold territory and a breakout from this condition should add to the rally.
We recommend a long position at 1.2925 with an additional entry at 1.2775. We also recommend a stop sell order at 1.2850 in order to hedge against a positive surprise tomorrow and before adding new long positions.
Traders who wish to exit this trade are advised to place their stop loss order at 1.2850. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.3175.
Here are the reasons why we call the EURUSD currency pair higher
- EURUSD has corrected sharply and currently trades at good support levels
- MACD indicates absence of extreme bearish pressures and histogram has gaped away from moving average
- RSI is trading in oversold territory
- Short covering which should add to the scope of the rally
- Disappointment from NFP report tomorrow
- New institutional positions from swing traders