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Establish EURUSD long position at 1.3375
Stop loss 1.3185.
Target is an early test of the 1.3739 recent high and possibly beyond



• EURUSD will post a bullish outside day (key day reversal) on a close today above 1.3328.
• This will only be the 3rd bullish outside day on EURUSD since the low put in at 1.2457 in March in the down move from 1.4720.
• The other 2 bullish outside days were

o 16 March when it posted a bullish outside day as a continuation and closed at 1.2970. In the following 48 hours it reached a peak of 1.3499 and 1.3739 the day after that. Obviously the Fed meeting and the announcement of quantitative easing contributed to the magnitude of this move.

o 22 April when it posted a bullish outside day (Key day reversal) at the low of the 1.3739-1.2885 fall. It closed at 1.3003 and within 48 hours had traded up to 1.3302 and eventually higher today at 1.3426.

• Today’s bullish outside day is more impressive than the other 2 in one respect. The high on Friday was 1.3328 and the low was 1.3219 and it closed at 1.3266. After EURUSD opened up following the weekend it traded higher to 1.3347 before falling sharply to 1.3213 just after 8 a.m. New York time. As a consequence it was suggesting the danger of a key day reversal down. (Higher high and lower low than Friday, which would have been confirmed by a close below 1.3219.) Instead the sharp rally higher from 1.3213 has reversed that pattern into a bullish outside day from a bearish outside day. This seems to be a very powerful flip.
• In addition today will be the first daily close above the downward sloping trend line at 1.3272.
• Neither of the 2 prior bullish outside days have since seen their lows tested.
• It is believed therefore today’s development could be a platform for rapid gains towards 1.3739 and if broken an acceleration beyond.