Near-Term Outlook for the EUR/USD

Where is the EUR/USD going for the rest of this month?? 

The European Central Bank policy meeting on 21 April 2016 ended without any surprises. Traders shift attention to the US Fed’s policy meeting on 26-27 April 2016. Though there are no expectations of a rate hike from the FED in this meeting, the market participants will watch for any clues of a possible rate hike in the mid-June meeting.

What does the chart forecast?

eurusd 1 rakesh

The currency pair has been in a trading range for more than a year. The pair has returned from the resistance level of around 1.150, for the third time, as shown in the chart. Hence, long positions at the current level are advised only above the resistance level or on dips.

eurusd 2 rakesh

The pair is at the top end of the trading range and has broken down the uptrend line as shown in the chart. The 20 EMA, which acted as a support on two previous occasions has not provided any support in the recent fall.

However, we could see the 50 EMA act as a support level hear as it’s in accordance with the Support level of 1.1230 range (shown in the chart as a horizontal line).

The pair is forming a bearish descending triangle pattern. In the coming week, the pair is likely to trade within the triangle, though intraday, it can violate the support and resistance levels. In a situation like this, you’re not going to find high Risk to Reward setups–as those usually come in trends–the EUR/USD is suited for range-trading strategies where you can take advantage of the bounces back and forth.

With that said, the market has been tiring in this type of range and a breakout could be coming soon.

**Remember, most traders think that a breakout means you need to jump on QUICK… but this is not the case. If it’s a true, sustained move you’ll have plenty of time. Let a breakout prove itself and then catch the next 60% of the move rather than trying to capture 100% of the move.

You can make a LOT of money by just capturing portions of a given move. Remember that!

On a breakdown and close below the supports, the lower targets are 1.116 and 1.098. The level of 1.140 should offer a strong resistance on the way up.

Hope this helps you as you look at the near-term possibilities with EUR/USD.

-J

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