Scalping the EURUSD: Breakout or Fakeout?

Talking Points

• EURUSD March opening range breaks to the topside- bullish
• Key resistance- 1.3895- Bearish invalidation
• Weekly opening range forming just below

EURUSD Weekly Chart

EURUSD Daily Chart

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• EURUSD Breaches key resistance 1.3800/30range - bullish
• Breach opens up targets at 1.3895, 1.3946 & 1.40
• Subsequent topside objectives at- 1.4074, 1.4150 & 1.4230
• Weekly opening range in focus
• Daily RSI hold 60-breach suggests topside remains in focus
• Momentum support trigger pending
• Support at 1.3800/30, 1.3767 & 1.3706- bullish invalidation
• Key Events Ahead: Comments from the ECB President Draghi on Wednesday & US Retail Sales on Thursday & Michigan Confidence on Friday

EURUSD Scalp Chart

Notes: The EURUSD made a decisive break above the 1.3800/30 threshold noted last week- “a level of technical significance that is defined by the 100% extension if the July 2013 advance and the 61.8% retracement from the decline off the 2011 high. This region has caught the monthly high closes for all three of the last major rallies seen in October, December and February. A longer-dated trendline resistance dating back to the 2008 high also converges on this range and if compromised, would suggest that a more meaningful low was put in last month.”

A breach and weekly close above this level has now shifted the medium-term outlook back to the topside. The weekly opening range is forming just below key interim resistance at 1.3895 and we will look for a break of this range to validate our near-term scalp bias. Ideally looking for a fresh weekly low to buy into, but we we’ll respect a break/close above 1.3895 with such a scenario targeting subsequent resistanceobjectives towards the 1.40-handle and above.

Bottom line: the broader bias remains weighted to the topside while above 1.38 with only a break below 1.3706 invalidating this particular setup. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

• GBPUSD at Risk Heading into BoE, NFPs- Key Resistance 1.6754
• EURUSD Opens March at Critical Resistance- ECB / NFP Game Plan
• Gold Rally Vulnerable Sub $1361- March Opening Range, NFPs in Focus
• USD Setups Heading Into March Open- Key Rate Decisions, NFPs on Tap
• EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus
• USDCAD Reversal Underway- Long Scalps Favored Above 1.10

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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