Update: As expected, the pair broke to the upside of the range. It was a nice 100-pip trade if you made it. Now, we have reached our target of 91.20. We would be selling here, with a tight stop.
It was an exciting day in the forex market with the EUR, GBP, AUD and NZD rallying significantly against the dollar and yen.
Today we’re looking at a pair that avoided most of the noise and has carved out a nice, technical channel trade. We can see it here:
There are two ways to trade a channel.
1) to buy near the bottom of the range and sell near the top
2) wait for a breakout and go with it.
Our bias is to see a breakout to the upside at this point, so buying at the bottom of the range and holding until it’s clear that the top of the range is holding. If we saw a break through the bottom, however, we would be sellers.
From a longer-term perspective, we can build a technical case for strength or weakness. We will be watching 91.20 as key medium-term resistance.