EUR USD Technical Analysis - EUR USD Trading: 2014-11-18

Market choice

Today at 14:30 (CET) Producer Price monthly Index will be released at the US – PPI m/m. The indicator is formed by Labor Department and displays a percentage change of prices for US goods and services. PPI m/m is a basic inflation factor and takes three areas of production into account : manufacturing, commodities production and processing industry. The indicator publication may influence volatility of the most liquid currencies. Inflation is a key factor which defines the monetary policy of Fed and a pace of transition from quantitative easing (QE) to a traditional model of regulation. The acceleration of this process and the perspective of basic rate growth will inevitably lead to the strengthening of USD against other currencies.

Let’s consider EUR/USD instrument on the H4 chart. The price is still moving inside falling D1 and H4 trend channels. At the same time we may observe certain dangerous bullish signals. In particular, the triangle equilibrium has been broken in the direction of green zone with simultaneous formation of bullish divergence of RSI-Bars oscillator. One of previous bars has broken the weekly (!) resistance level which is an important signal of bear’s attenuation. We suppose that unstable market equilibrium is observed and that an upward breakdown of D1 trendline is probable. At the same time we can not exclude a correction weakening with an account of basic tendency influence. We shall give the market an opportunity to make a choice. For now it should be reasonable to consider two symmetrical opposite pending orders, formed with an account of two key levels: 1.25817 и 1.23932. Both levels are verified by historical values of ParabolicSAR trend indicator, boundaries of Donchian channel and Bill Williams fractals. One of proposed levels may be used for pending order opening with stop level located below or above another key level. Under condition of first order activation, another one should be removed.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal high (short position) or low (long position). Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position	Buy
Buy stop	above 1.25817
Stop loss	below 1.23932

Position	Sell
Sell stop	below 1.23932
Stop loss	above 1.25817

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