From the Desk of Ian Culley @IanCulley
The dollar is dropping!
It’s finally time to bet on some sustained downside action, and the euro is my vehicle of choice.
I laid out the conditions that would flip my outlook on the euro earlier this month. Three weeks later, the pieces have fallen into place for a bullish position.
Let’s take a look.
Here’s the daily chart of the EUR/USD pair:
We have two reasons to get long the euro:
- It’s reclaiming a level of former support turned resistance at 0.9905.
- Momentum is breaking out of a bearish regime.
To be clear, I am not buying the violation of the downtrend line. I do not trade trend-line breaks. However, it does add to the conviction of my bullish bias.
As long as it’s above the September pivot lows near 0.9905, I like it long toward multi-year support at 1.0350. I imagine the euro runs into resistance at the shelf of former lows as the principle of polarity likely takes effect.
Of course, you could always wait for a close back above 1.0350.
That makes perfect sense. If and when it does close back above that level, I will add leverage – without a doubt!
For now, I’m simply testing the waters by putting on a small initial position.
Evidence is growing in favor of a USD reversal, and I like how the EUR/USD is responding at current levels. It’s that simple.
Stay tuned!
Thanks for reading.
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Allstarcharts Team