Good Shorting Location Coming Up For The EUR/USD
Shain Vernier • 1 min read
The EUR/USD has been extremely active over the past three sessions, creating opportune market conditions for short-term traders. Kudos to all who got in on the earlier sell signal for this pair. It closed out a winner, hitting the take profit.
Currently, we are seeing a moderate retracement in pricing, trading in the 1.1625-35 area. Price action is firmly inside of Friday’s range, bringing a key Fibonacci resistance level into play.
EUR/USD Technical Outlook
The greenback has made a considerable move against the Euro over the past few weeks. Last Thursday’s ECB announcements added fuel to the fire, prompting a large sell-off.
EUR/USD, Daily Chart
Moving forward, here are a few observations facing this market:
Wednesday’s FOMC announcements are going to dictate the direction of the USD. Although a rate hike is unlikely, I expect hawkish verbiage out of FED Chair Yellen.
Last Thursday’s sell-off prompted a crossover of the Bollinger MP and Daily SMA. This is a signal of changing market sentiment.
The macro Fibonacci retracement level at 1.1422 is crucial as we move into the fourth quarter of 2017.
Bottom line: Like many traders, I have a bearish bias towards the EUR/USD. But, that can change at a moment’s notice. For now, shorts from the 38% retracement of the current bearish run at 1.1674 is good trade location. A 1:1 R/R with an initial stop above 1.1705 produces over a 30 pip return on the trade.
In trading, timing is everything. I am optimistic the short entry will go either later today or during the overnight. In the event that it is not closed out by Wednesday, check back for a trade management update ahead of the FED announcements.