EURUSD Bounces From the Long Term up Trendline

Friday brought us few important decisions on the Forex Market. It seems, that on two main instruments with the USD (EURUSD and GBPUSD), we just finished bearish corrections and we are ready for a legitimate mid/long-term buy signal.

Here, in the mid-term, we are still in the rectangle (orange lines), so we do have a big sideways trend, which for the trend followers is not the best place to be. Despite that, we do see a big picture here (Bullish trend since the end of 2016) and we cannot ignore the fact, that we just tested the long-term up trendline (blue,connecting higher lows since April 2017). Our optimism towards the EURUSD comes from the fact that that test was positive for buyers. On the daily chart, EURUSD created a bullish engulfing pattern (yellow rectangle), which can be considered as a very strong buy signal. This trade is good in terms of the risk to reward ratio. Stop Loss usually should go below the tails and the potential profit is..infinite (that is what you get when you go with the trend).

If you want hard numbers then OK, the first target here is on the resistance taken from the upper line of the rectangle and is currently 250 pips higher. If you add here that the SL has around 60 pips, you get a sweet deal here, which is worth, at least, considering.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis