Technical Analysis EURUSD : 2014-09-16


Good day, dear traders. Today at 14:30 (CET) a major economic indicator, US Producer Price Index will be released. It measures the percentage change in the selling prices of goods and services produced within the US. PPI is the main inflation indicator as it includes three key sectors of manufacturing: heavy and light industry, raw materials,commodity sector and the processing industry. We expect that the PPI release will add volatility to Forex market and will have a considerable impact on the most liquid instruments.

Let us consider the EUR/USD 4-hour chart. The H4 trend line is confirmed by the readings of the Parabolic indicator and the lower Donchian Channel indicator. The RSI-Bars oscillator also signals a bullish mood. The continuation of the impulse is expected after the breach of resistance at 54.8%. We assume that it will happen simultaneously with crossing the price level at 1.29616. This can be used for opening a pending buy order. We will fix the risks at the last fractal minimum level at 1.29056, which supports the trend line and is confirmed by both indicators. Trend reversal is not likely but is not impossible. It should be noted that the market approaches the resistance D1, where the bearish mood grows stronger. In that case we can set up a mirror symmetrical position: sell below 1.9056 with a stop above resistance at 1.29616. It doesn’t pay to pressure the market – it will make its own decision.

After opening the position we move the stop to the zone of next fractal minimum (long position) following the Parabolic indicator, or to the zone of fractal maximum (short position). It is sufficient to do daily resetting after the formation of 5 new 4-hour candles, which are necessary for the formation of Bill Williams’ fractal. Thus we change the possible profit/loss ratio in the direction of no loss state.
PositionBuy
Buy stopabove 1.29616
Stop lossbelow 1.29056
PositionSell
Sell stopbelow 1.29056
Stop lossabove 1.29616
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