EURUSD Bouncing Upwards

The euro symbol following an uptrend.
.06 May 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing on EURUSD

  • Financial instrument: EURUSD
  • Title: EURUSD Bouncing Upwards
  • Timeframe: Daily
  • Session: London
  • Trend: Up
  • Trend Confirmation: Price above the Alligator
  • Momentum:¬†Awesome Oscillator above zero
  • Support Levels: 1.07418(PP), 1.06708 (S1), 1.05783( S2)
  • Resistance Levels: 1.08343(R1), 1.09053 (R2), 1.09978 (R3)
  • Trading Strategy: Buy on Up Fractals

Introduction

The Euro versus the US Dollar has been in an upward trajectory since April 23, when prices closed above the Up Fractal of 1.0690. However, the Up Fractal was formed below the Alligator, and the Awesome Oscillator (AO) was below the zero line; there was no confirmation. Subsequently, both indicators confirmed the breakout fractal of 1.07529, which signaled a buy entry. Additionally, note that all three Alligator lines point upwards while they are also aligned for an uptrend. Employing technical analysis, particularly the Alligator indicator, we aim to discern potential entry points, protective stop loss levels, and three profit-taking levels for traders considering positions in this currency pair.

Alligator Indicator Overview

The Alligator indicator, developed by Bill Williams, comprises three smoothed moving averages with distinct periods:

  • Jaw (blue line): 13-period SMA shifted 8 bars into the future.
  • Teeth (red line): 8-period SMA shifted 5 bars into the future.
  • Lips (green line): 5-period SMA shifted 3 bars into the future.

Technical Analysis

The EURUSD price chart in an uptrend as shown by the Alligator indicator and the Awesome oscillator and the Up Fractals. Also, the weekly pivot points indicate potential support and resistance levels.

Trend Identification

  • Currently, the price is above the Lips; the Lips above the Teeth and the Teeth are above the Jaw. All three lines point upwards, indicating a continuation of the upward direction.
  • The Alligator indicator assists in identifying trends:
    • Up Trend: Lips above Teeth, Teeth above Jaw.
    • Down Trend:¬†Lips below Teeth, Teeth below Jaw.

Potential Entry Points:

  • Sell Entry:¬†When the Lips cross below the¬†Teeth,¬†and the Teeth cross below the Jaw, it suggests a potential downtrend. Consider entering a sell position upon a confirmed break below a significant support level.
  • Buy Entry:¬†Conversely, if the Lips cross above the Teeth and the Teeth cross above the Jaw, indicating an uptrend, consider entering a buy position upon a confirmed break above a notable resistance level.
  • Buy above 1.08128:¬†A potential Buyentry is seen above the latest Up Fractal (at the time of writing).

Protective Stop Loss

Mitigating risk is crucial. Set a protective stop loss to limit potential losses if the market moves against the trade.

  • Sell Trade:¬†Place the stop loss slightly above the Lips, Teeth, or Jaw.
  • Buy Trade:¬†Place the stop loss slightly below the Lips, Teeth, or Jaw.
  • 1.06493:¬†The initial stop loss for a potential Buy trade¬†is¬†set¬†below the Jaw at 1.06493.¬†

Potential Profit Levels:

Establishing profit targets is essential for effective risk management:

  • 1.08343:¬†The first profit target¬†is¬†set¬†at¬†1.08343, where significant resistance¬†is expected. The value aligns with the R1 weekly Pivot Point.
  • 1.09053:¬†The second target could be¬†set at¬†1.09053, aligning with the R2 weekly Pivot Point.
  • 1.09978:¬†The third target stands at the R3¬†resistance, using the weekly Pivot Points calculation.

High Impact Economic Events

  • Tuesday, 04:30 am (GMT+0): Cash Rate(AUD)
  • Thursday, 11:00 am (GMT+0): Official Bank Rate (GBP)
  • Thursday, 12:30 am (GMT+0): Unemployment Claims (USD)
  • Thursday, 05:01 pm (GMT+0): 30-y Bond Auction (USD)
  • Friday, 06:00 am (GMT+0): GDP m/m(GBP)¬† ¬†
  • Friday, 12:30 pm (GMT+0): Unemployment Rate (CAD)¬†
  • Friday, 02:00 pm (GMT+0): Prelim UoM Consumer Sentiment (USD)¬†

Conclusion:

In summary, the EURUSD is following an upward trend, as confirmed by the Alligator and the Awesome oscillator. All three lines, namely Lips, Teeth, and Jaw, are pointing upwards, indicating that the upward trend is expected to continue. Traders can use the Alligator indicator in technical analysis to identify trends, potential entry points, and profit-taking levels in the precious commodity. However, it’s important to complement technical analysis with fundamental factors and market sentiment for a well-informed decision-making process.

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).