Trade Recommendation: EUR/ILS

The Euro/Israeli Shekel pair started its uptrend in November 2008 when it reclaimed support of 5.00. The price action was a signal that the market has bottomed out. The pair continued its rally until it breached 5.40 resistance in March 2009 and triggered the inverse head and shoulders pattern on the weekly chart. This attracted momentum players which lifted the market to as high as 5.7831 in July 2009.

In four months, the Euro gained over 7% against the Israeli Shekel. At this point, however, the target of the inverse head and shoulders was met. As those who bought the breakout took profits, the pair dipped to 5.3111 in the same month. Bulls bought the dip and tried to keep the momentum alive but they could only manage a bounce to 5.7374 in November 2009.

The lower high killed the market’s bullish steam. Market participants started to dump positions to preserve their capital. EUR/ILS posted a series of lower highs and lower lows until it found the bottom at 3.8234 in March 2017. The pair has been rallying since and it is poised to ignite another bull run.

Technical analysis show that the Euro/Israeli Shekel pair is close to breaching 4.40 resistance and trigger an inverse head and shoulders reversal pattern on the monthly chart. The pair’s rally is coupled with significantly increased momentum as the pair has taken out 53 resistance in the RSI. This suggests that bulls are eager to take back the market.

The strategy is to buy the breakout at 4.40. If bulls complete the breakout, they may gather enough momentum to reach our target of 4.95 in three months.

Monthly Chart of EUR/ILS

As of this writing, the EUR/ILS pair is trading at 4.3534.

Summary of Strategy

Buy: Breakout at 4.40.

Target: 4.95

Stop: 4.35 after the breakout.

 

Featured image courtesy of Shutterstock

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.