ECH10 – March Euro (Last:1.3700)

The Euro has been tracing out a bowl-shaped formation for more than a month, and it might now be poised to break out strongly to the upside.  Important prior highs are within reach, and the next two of them will be surpassed if the Euro hits a D target of 1.3756 shown in the attached chart.  Above that level is a cluster of prior highs ranging from 1.3789 to 1.3840.  The 1.3756 pivot has high credibility due to a large bounce off of its exact sibling midpoint of 1.3688.  A shallow pullback from the current level, perhaps to the 1.3688 midpoint area, would give rise to a camouflaged buying opportunity, as depicted in the chart.  Traders looking to short the 1.3756 pivot should not enter orders before the prior high of 1.3737 has been surpassed, as this might release a burst of upside energy.  For the same reason, traders with long positions should treat the 1.3756 pivot as a minimum upside objective and use trailing stops so as to remain long in case the market slices through the pivot.  (Posted by Doug McLagan)  _______ UPDATE (10:37 a.m. EST):  The Euro slightly surpassed both of the two priors marked in the chart and then pulled back to one pip below the midpoint pivot.  The ensuing rally indeed sliced through the D target and went as high as 1.3796, a move that was worth as much as $1,362 per contract.  The prior high of 1.3789 was surpassed, giving the Euro chart an increasingly bullish look.

Tagged as: ECH10, Forecast, March Euro