Top Trade Idea For May 20th, 2014 – EUR/USD

Top Trade Idea For May 20th, 2014 – EUR/USD

By Gregor Horvat on May 20, 2014 02:05:08 GMT

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EURUSD reversed strongly to the downside two week back after the ECB press conference when Draghi made a hint in his speech that they may take appropriate actions if EUR will continue to the upside. Pair fell sharply since then, more than 300 pips away from 1.4000 psychological number.

On weekly candlesticks chart we can see a strong reversal pattern at the top that suggests more weakness for the EUR in weeks ahead.

EURUSD weekly

In fact on the 4h chart a decline can be counted in five waves which in Elliott Wave theory represent an impulsive wave. When you see such pattern occurring away from the highs and lows then you know that something is changing. In our case it means that top has been formed, even if just temporary, and that price will continue to the downside after a corrective rally.

EURUSD 4h Elliott Wave Analysis

We are already tracking a corrective rally, labeled as wave (b) that may look for resistance around 1.3770 or 1.3810. At the same we see 1.3992 high as invalidation level, meaning as long this level is not breached trend is down.  But when it comes to trading we are focusing on 78.6% as our maximum upside Fibonacci level that can represent a stop loss. With that in mind, a trade plan can be as follows:

½ EURUSD Sell Limit @1.3770

½ EURUSD sell Limit @ 1.3810

Stop @1.3920

Target 1.3550

Trade plan should be canceled if pair falls to a new swing low before touching the entry levels

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About Gregor Horvat

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and He also is founder of forex services on provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: Try’s Services For 14 Days for just € 1 at .

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