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The power of the EUR/USD pair is inevitable, with the euro slowly regaining its strength and the US dollar still the most traded currency worldwide. There are several ways to trade this pair, but the following three strategies have been proven effective.

Buy the breakout or sell the breakdown. Oftentimes, the EUR/USD slides to and fro within confined boundaries for longer periods, mounting precise trading ranges that will sooner or later lead to new trends. The key to this simple strategy is good timing. It is advisable to cut timing risk by putting a partial position should the pair break out or down and integrate it on the original minor retracement.

Purchase or sell the pullback. The currency pair’s trend bears the price from one level to the other and glides in both directions. However, such a movement tends to subside in the event the supply/demand equation changes, often entangling those who positioned themselves late that will be heated for losses if the pair reverses and moves to the other direction.

The pullback strategy cashes in on the countertrend movement, pinpointing important support or resistance levels that should seal the price swing and revive the first trend direction. These levels frequently come at previous highs or lows, and key levels set by Fibonacci retracements, the interception point of the initial thrust, and moving averages.

Enter narrow range patterns. In most cases, this pair will escalate or decrease into a significant barrier and then rest, recording narrow range price bars that slash volatility and increase apathy levels. Incidentally, this is a strong entry signal for a breakdown or breakout. A tight stop is placed in case of a key reversal.

The setup frequently prints an NR7 bar, the narrowest of the seven bars. This powerful pattern predicts price bars will develop in a considerable breakout or breakdown. It is also a low-risk entry since the stop loss can be placed near the entry price.

Here’s how to trade the euro: buy the breakout or sell the breakdown, purchase or sell the pullback, and enter narrow range patterns.