By: John Ursus
Timeframe: W1
Recommendation: Long Position
Entry Zone: 1.1750 – 1.1850
Take Profit Zone: 1.3000 – 1.3100
Stop Loss Zone: 1.1550 – 1.1600
The EURUSD has been in a freefall as multiple bearish factors have resulted in an increase of the selling pressure. The EURUSD recorded a nine-year low and broke down below a crucial support level from July 22nd 2012 before slightly rebounding. The correction took this currency pair from an intra-day high of 1.3993 to an intra-day low of 1.1754. The EURUSD is trading in extreme oversold conditions from where this currency pair could face a short-covering rally.
The sell-off took the EURUSD well below its 38.2 Fibonacci Retracement Fan, but the move ran out strength after the breakdown below its July 22nd 2012 low occurred which could signal a short-covering rally in the EURUSD back into its 38.2 Fibonacci Fan from where more upside is possible. Forex traders are advised to spread their entries over a 100 pips range between 1.1750 and 1.1850. The downward potential appears to be rather limited while the upside potential remains very attractive.
