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EUR/USD Reversal Pattern (January 22, 2014)
EUR/USD’s recent selloff might soon be over, as the pair formed a double bottom on its 1-hour time frame. This is a classic reversal pattern and the uptrend could be confirmed once the pair breaks above the neckline of the formation.
Right now, the pair is still testing the neckline resistance around the 1.3600 major psychological level while stochastic has reached the overbought zone. Take note though that the oscillator hasn’t crossed down yet though, which suggests that there’s still enough buying momentum left.
A long order above the neckline around 1.3600 could be a good entry area. Setting the stop below the 1.3550 mark with a target of 100 pips, which is roughly the same size as the chart pattern, could yield a 2:1 return on risk.
By Kate Curtis from Trader's Way
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