EUR/USD: Low Risk Opportunity Or Sucker Play?

The EURUSD is testing the 100 bar moving average on the 5 minute chart.  The level may be a low risk trade, as right below is the 38.2% retracement of the days range at 1.4009.    A short term trade would be to buy here and look for the market to bounce back higher off the moving average support and the 38.2% retracement level.  It is always better if you have more than one reason to buy (or sell) from technical indicators (i.e. 100 bar MA and 38.2% retracement).

If the market rallies off the dual support levels I look like a hero.  If, however, the market dips below the 38.2% level (my stop),it is a suckers play.  What makes it more of a suckers play is it is Friday and the market squares up positions.  So in the afternoon, the price can move up and down in random fashion.  I consider the market in that pattern now.

So it is a calculated risk reward play with a suckers play risk added to it as a result of the randomness of the trading on a Friday.  Sometimes it works.  Sometimes it doesn’t.  The decision is yours.

For a profit target the  50% retracement level can be a target at 1.4032.   A more ambitious play would be to the 200 bar MA at the 1.4052 level. Up there the  61.8% retracement also provides resistance.  So that would be the limit in my mind at least for the day and the trade.

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