EURUSD, Daily Chart, 22/02/13 closing of trading week : Trade Setup

EURUSD_Daily_Chart_Signal_250213

On the DAILY Chart of EURUSD, we see the conditions for a nice Trade Setup. Pair which is on an uptrend, has made a corrective retracement from 1.3700 level down below Fibonacci 61.8 level, touched 1.3140 and now it’s getting ready to RESUME its uptrend. How do we know? The level at which price has found balance (@1.3185) after making the downward spike, is a Strong Support Level, we see a Spinning-Top Candlestick which is a very strong Bullish Reversal Candlestick Formation when seen after a Downtrend. Our Confirmation comes from the fact that Stochastic Oscillator is at Oversold levels below 20 and in DIVERGENCE with Price Action. While price makes a Lower Low, Stochastic makes a Higher Low and this is called a BULLISH Divergence which gives us a Valid BUY Signal. When to ENTER? An aggressive Trader may enter LONG immediately at the opening of the next Candlestick. A less aggressive trader, will enter long ONLY if the next candlestick opens higher. The conservative trader will enter at the Close of the next Candlestick, if it is Higher. Where to place STOP-LOSS? A few pips BELOW Spinning-Top Candlestick’s tail at 1.3130 would be fine. So we’re risking 55-80 pips depending on our Trading Profile. Price has completed a corrective move and will resume upwards till it reaches 1.3700 again. So that will be our TAKE-PROFIT/Exit Point. With a PROFIT POTENTIAL of 500pips and a risk of 55-85pips, we’re having a RISK/REWARD Ratio of 1:10 which is excellent!