FX.co ★ Technical analysis and trading recommendations for EUR/USD for July 5, 2010

4-hour timeframe

Overview:
The formed on Thursday ‘buy’ signal with the target at 1.2620 is going on. The signal is strong and confirmed as the price is placed above Ishimoku cloud and Chinkou span is above the price curve. Also, the price is close to the first resistance level of 1.2535, therefore, for continuation of ascendant movement, the price fixation above this level should be awaited. In this case the next target will be the second resistance level of 1.2641. In addition, it should be noted that the price has reached the target level and in the closest time reversal is probable to take place. It should be mentioned that a correction is about to happen and it is indicated by Tenkan-sen and Kijun-sen diverging. If the price fixates below Kijun-sen, the ‘buy’ signal will weaken. Chinkou Span is positioned above the price curve testifying to bullish sentiment. Bollinger bands show rising motion – the bands are diverging and up-directed. MACD is moving down speaking for correctional decreasing motion.
Trading recommendations:
In these circumstances, it is recommended to bull, as there are no signs of reversal. The target is at 1.2641. Enter the market only after MACD up-reversal or another signal for uptrend renewal. Place stop loss below 1.2370.
Besides technical picture, fundamental reports and time of their release should be considered also.
The chart annotation:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.