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Fig. 1-1

 

Fig. 1-2

Here's a trade idea to end/start the year right on the winning track. Let me explain the details:

1. As we can see in Fig. 1-1 there is a hammer forming at the 1.2875, which is an important weekly level (if you care to go backwards a little bit).

2. This hammer is also forming at the end of a AB=BC pattern which can be seen on Fig. 1-2. 

3. There is a divergence with RSI, as you can see at the bottom of Fig. 1-2.

4. All the mayor pairs are showing similar candle formations this day.

After all the analysis we can conclude that chances are EUR/USD will rise in price. So the idea is to enter long at the break of the hammer.

Trade Idea 2011-12-29

EUR/USD Long @ 1.2966

SL @ 1.2845

TP @ 1.3500

Nice trading!