Yesterday we were talking about how EUR/USD and how it looked like this forex pair was about to turn higher since the sellers couldn’t push past the 1.1550-60 level. Or was it last week? Damn time goes so quickly I have lost track of it.
However, EUR/USD turned higher and today it completed a full leg. Now, this forex pair has reached that level we were talking about, which looks like a good opportunity to try another long term sell forex signal from.
My colleague Shain, posted an update where he highlighted an opportunity to go long on this pair, but he is referring to a short term forex trade, while I am looking at a long term trade, so don’t get confused by this.
Well, we’re not going short right now, especially after today’s strong move. But I’m observing the price for signs of weakness, so we can get a decent entry price before it turns lower.
As we said before, stochastic would be overbought by the time price reaches the 50 SMA
As you can see from the daily chart above, this forex pair has climbed nearly 100 pips today breaking the 20 (grey) and 100 (green) SMAs and it is approaching the 50 SMA (yellow). We highlighted this moving average as a level where sellers might be interested.
It has provided resistance three times last month despite being briefly pierced once. Now, the stochastic indicator is sort of overbought and tomorrow it will be properly overbought when the daily candlestick closes.
That, together with the 50 SMA if the buyers push to 1.1780-1.18 and the chart setup will look quite bearish. EURUSD is in a downtrend and this looks like a perfect retrace higher before resuming the downtrend.
The monthly chart has turned lower and it looks pretty bearish too, so I think that the downtrend will resume. I just hope that the buyers push up there so we can get a good risk/reward ratio.