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The Euros has rallied strongly against the Greenback during yesterday’s session and see it heading back to the 1.2400 level. Putting our attention on this level, we will notice the strong selling interests of the market players as highlighted in the 3 rectangles. Buying it up, could means tighter stop losses to accommodate for the limited reward if the Euros rallied further. Assuming we are lucky enough to see it head to 1.2440, we would gain a good 90 pips. What are the risks here? You can take advantage of yesterday rally that is still fresh in the minds of others and set stop loss near buying interest level. 1.2326 denoted by the green horizontal line. A 30 pips risk and that’s how much we want to risk, anything more would be risky and against the principle of keeping losses small.
3 particular bullish candlesticks circled in the chart above were evidenced in the possibly of a strong rally. Selling it now would not be a prudent choice as we are ignoring the fact that there is a high possibility of market heading up. Nonetheless, a possible break at 1.2250 may build up momentum downwards. Following the article: EUR/USD August 16 2012: Eyeing on a Break of 1.2250, I am not supportive for this uptrend, as I would still prefer to sell it after this rally has reached its perceived high. However, noting of this bullish behaviour in the market at least in the short run does open to buying opportunities with tight risk to make this whole venture worthwhile.