Once again, the EUR/USD pair has closed out the week on its highs. This pair has been nothing but strong and every pullback has been a buying opportunity. On the bigger picture, this pair is in the process of breaking a weekly bearish trendline resistance that may still be in play at these levels even though there are no particular bearish price action confirmations at this time. Also on the 4 Hour chart, take notice of the new high on price and the subtle lower high on the 14 period CCI. This price warning is also present on the weekly time frame. This information suggests that the current bullish price momentum is weakening on the larger time frames and points to greater potential for a healthy correction in the next week. From the bullish perspective, there are two bullish trendlines intact on the 4 Hour time frame, and our new significant support level is around the 1.4350 – 1.4250 area. This week, I will be looking for price to pullback into this range and find support. I will be watching for bullish candle reversals and other chart formations to confirm that there are buyers present. Once I am satisfied with the supportive price action, I will look to get long somewhere within the range. My risk will be measured by how near I am buying to the 1,4250 area. I will be referencing the 1.4250 area to place my stop which means it will be somewhere around the 1.4230 area. Remember there are no exact numbers in this. Also keep in mind because of the nature of this advance, this pair may experience a broader correction and you must be ready to step aside if the corrective scenario unfolds. A break of the 1.4250 area will imply further weakness and it is possible that price may work its way back to the 1.4100 – 1.4050 area overall. Since the trend has been so bullish, I have no intentions to go short at this time. If price can break the 1.4000 overall, then I will re-evaluate and consider larger time frame shorts. If you are interested in participating in a corrective movement in an environment that is generally bullish, consider trading smaller time frames only in order to reduce risk.
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