Two $EURUSD Set Ups to Watch.

• Posted by: ragheehorner
• February 8th, 2010

Probably like many of you, the Red Bull cans are piling up as your try and stay awake today.  Boring markets mean accumulation cycles and that's what I'm patiently watching today.  The 60 minute chart of the $EURUSD has a nice asymmetrical triangle pattern as prices have formed an intraday triple top.  It's a soft top (variance between the highs are greater than five pips) but not by much.

I'm not a big fan of the afternoon entry as the hours between Noon and 6pm EST tend to see price action "wander" until the Asian session gets underway.

However, IF we see a break higher, then there's another set up that I think this breakout could lead into.  So the first step would be the breakout momo (momentum" but with MACD Histogram confirmation.  The second would be the resistance waiting on the 240 minute chart which is still in a mark down cycle.

I take the market cycle reading with my 34ema Wave which is pointing down in what I call a "four to six o'clock angle" as prices are currently congesting just below the 1.3700 major psychological level.

The conservative swing short would trigger off the 34ema low which is currently at 1.3756.   Using a Fibonacci retracement, the correction seems to be a solid ceiling with the 0.382 retracement resistance.  I am not usually a fan of the shallower 23.6% as it typically does not represent "enough" correction.  If you DO like this level -- especially since prices have stalled here which has probably just as much to do with the "00" overhead -- then the short trigger validity (think stop loss) would rely on the near term highs between 1.3716 to 1.3707.

I don't expect to see any decent follow-through until between 6:00pm (take a look a the graph above and when price action ranges begin to expand) and 8:00pm EST but watch the 4:00pm Dow close.

The stagnant Dow ($INDU) and Dollar Index ($USDX) will have to wake up to before seeing any trigger on the $EURUSD:

In the meanwhile, my *age-old* five minute intraday trades have been my "go to" set up.  You can check out the details of that strategy here.

- Raghee

p.s. hope to catch up with my StockTwits peeps in NYC this Sunday and Monday at the Expo!

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Tickers: $EURUSD, $INDU, $USDX

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