The Euro is about to break to the upside.. or not?
The single European currency is about to take off as it has already tested last night's Asian highs at 1.3580. The pair is set to take off and we are buyers of daily call options at this juncture if we see an hourly close above 1.3580, a bit higher than we mentioned in our forecast yesterday that we would like to see price close above 1.3570.
Not much change at first glance, however where we do see a change is in the price that triggers our scenario with the hourly close having to be above 1.3580 now. If it plays out we would be comfortable to buy daily options for today, tomorrow and the end of the week.
Today's daily low was set just below 1.3535, which comes as a big boost to our outlook for the Euro. We have had three consecutive days with higher lows and higher highs, which means that buyers are for now prevalent in the price action and it should be easy to get to 1.36 and test above 1.3650 by the end of the week.
A strong trend line that we have drawn from recent Euro peaks has been tested in the Asian session and prices peaked at 1.3580, this is why we have a new level to look at. Look closely during the next couple of hours as it will be a crucial play to let your Euro trades ride.
As for the alternative scenario it remains a break below yesterday's lows which are not very far from current market prices at 1.3663. As we were writing the pair failed at the test of levels above 1.3580 with the binary options forex pair touching 1.3583 before puling back.
Something might be cooking on the news front with PMI surveys and the German constitutional court's ruling on the legality of the OMT program that was postponed on Monday. So Thursday could be a very busy day having in mind that the US calendar will be active again.
In the mean time if the price after all manages to break below recent lows we would buy daily a daily put option for tomorrow, skipping today's expiry. Better safe than sorry, right? Our motto is to try and limit our losses in the first place, so we don't want to trade if we have too much uncertainty ahead.