EURUSD Technical Analysis
The EURO has rallied against the US Dollar from the low in December 2016. Today it reached the resistance level at 1.1720 created by the high in August 2015.
The touch of this level has created a pin bar candlestick pattern with the daily high touching the 1.720 area to the pip. The rejection of this level opens up the opportunity to short this currency pair with a medium to long term holding.
For confirmation of the short trade we should look for a break of an ascending trend line underneath price on the lower time frames. In this particular trade a break of an ascending trend line on the 4hr charts should be sufficient.
To add confluence to this trade set up we also have the Relative Strength Index showing over bought conditions as shown in the chart above. We also have the USD at critical price price levels across a number of currency pairs, in particular USDCAD. This dramatic fall in the USD is definitely due a come back.
As stated previously a break of ascending support on the 4hr time frame will signal the entry. With reference to stop placement a stop 20-30 pips above the resistance level should allow a sufficient buffer should the markets attempt a short squeeze and price rallies. We have 3 progressive targets to aim for to take profit.
These levels represent the weekly supply areas and conscientious traders should look to scale down positions as price moves lower.
For regular market commentary please check out my social media.
To trade forex with competitive spreads with a leading broker open an account with Plus500
For the very best charting software available on the web open a free account over at www.Tradingview.com