The Euro has been trying to break out of a resistance trend that it created against the USD over the past couple of months. Despite some of the better moves made recently the EUR is still having trouble breaking through this resistance zone.
The problem that the Euro is having in trying to break out of this resistance zone is that the price action looks to be largely dominated by two things. First, is that the EUR is trading with very weak breakouts and second, is that the USD is showing a stronger resistance trend.
If you look at the charts closely you will see that there are two distinct lines that you can follow which represents the breakout and resistance zone. If you look at the trend of both the EUR and the USD, you will see two distinct times periods when the trend reverses.
On the one hand you have an extended period where the EUR trades higher. This is called the rally band which contains the support area in the EUR. On the other hand the USD begins to reverse and then bounces lower again.
As you can see from these charts the breakouts in the EUR are a bit more difficult to find. There is only one breakout in the EUR and this is when it trades up on its initial support levels. A strong breakout in the EUR is an excellent place to start a long trade but the more common and reliable breakouts that occur on weak levels of resistance tend to have weaker support and a lower support zone.
In order to profit from a breakout in the EUR, you need to trade it early on when the price of the EUR is still higher than the swing high that the breakout would hit. You will want to avoid the bounce off the resistance level that happens during this period of strong resistance.
If you look at the recent moves in both the EUR and the USD, you will notice that there have been multiple instances in which a strong move in either currency has occurred against the federal bank’s latest action to stimulate the economy and expand the economy which came under the title of the Federal Reserve’s New Normal Banking Policy. This is a policy that is meant to take a step back and prevent the federal bank from doing anything that would be considered too aggressive to the financial markets in the future.
This means that the EUR is not going to face any problems breaking out of the resistance levels that it already has set and as a result the best thing to do is to take a risk in the EUR and ride out the resistance levels that are currently in place. A breakout may not happen for the EUR but if it does then the price action should be a good place to take profits. If you take advantage of a breakout in the EUR and ride out the support levels that the price may be facing then you can enjoy some real gains.
A breakout in the EUR, that occurs during the period of weakness in the Euro may be accompanied by a rise in USD as the Fed is seen as being more hawkish. As a result you will see the EUR price hitting support and resistance levels during this time. When you are trading a breakout in the EUR you are looking for the price to get below the opening support level before it bounces off. and then you can go with the momentum created and take advantage of a quick reversal in the EUR price as it goes back to the opening support level.
One of the problems that traders in the currency markets face when they are looking for a breakout in the EURs is finding these types of breakouts consistently. You can spot these breakout patterns by looking for the following resistance levels. as a trader you want to try and find these support levels as well because they are your chance to make profits.
One way to look for these breakout patterns in the EUR is to analyze the history of the last five sessions of strength for both the EUR and the USD. Take note of when the currency markets are moving and what they seem to do in relation to a breakout in the EUR that will occur in the future.
The history of the EUR can give you an indication of what to look for in terms of what you should expect from a breakout in the EUR and also in terms of the current status of the EUR and the federal bank’s actions to stimulate the economy in the future. This is a big one for successful traders. If you can spot the pattern, this information could help you make money in the long term.