I’ve been waiting for a bottom to form in Eur/Usd for the last 3 weeks and it looks like it’s finally taking place.

Although I got stopped out on my initial trade from 26 Dec 2011 (-200 pips) and almost got stopped out of this last trade, fortunately Eur/Usd bottomed and I’m currently +140 pips on the Long Eur/Usd trade from 1.2790.

I think that Eur/Usd will head towards 1.3400 or higher over the coming 3-4 weeks so I will be holding my Long Eur/Usd position. I will however move the stop to break-even to eliminate any risk from the trade.

Let’s take a look at a daily chart of Eur/Usd and do some analysis:
(click on the chart for a larger view)

• Eur/Usd bottomed at a level of 1.2626 which is also the same level it bottomed at in August 2010.
• The MACD daily histogram has crossed above the 0 line. The last time this happened in October 2011 we saw a rally of 1100 pips.
• The daily RSI is almost above the 50 level, meaning it’s heading towards bullish territory.
• Daily stochastics have crossed upwards and are pointing up, this is bullish.
• The first resistance was the daily 21 MAE at about 1.2890 which has been broken to the upside. It was then tested again but proved to be support. This is very bullish in my opinion.
• The second resistance will be the daily 50MAE which coincides with the level of the last major low in October 2011.
• After this the next resistance will be the daily 100 MAE which is currently around 1.3370, but as you can see on the chart, in October 2011 it shot through that daily 100 MAE with a daily spike. This means that there is good potential for Eur/Usd to head to about 1.3600 over the next weeks.
• I don’t expect Eur/Usd to drop below 1.2850 before it heads to at least 1.3100 first.