Eurusd has been continuing its sell off for the past 9 weeks. After last Thursday’s (04/sep/14) dramatic fall (over 200 pips in under 4 hours or less) on account of the ECB meeting and despite a negative NFP number the pair could not gain significant ground; which indicates that the market wants to continue selling off.
As of right now, it does seem that the pair might consolidate or retrace a little before continuing its downward trend. Technically we are seeing resistance at 1.31175 & support at 1.27619.
As a more immediate trade we have an inside day candle that got posted as a spinning top close to its lows; which in terms of price action trading could indicate two things:
1) Eurusd has bottomed out in the near term; and a break above 1.29864 (the high of Friday) could indicate a short corrective rally to 1.31175. A good trading idea would be to sell at resistance which will lead to a better R:R trade.
2) However; if that doesn’t pan out than of course the candles setup should be viewed as a continuation pattern; which according to price action trading has a higher probability of occurring. One can trade this as a breakout strategy by going short below the low of Thursday (1.29168).
Both trades should target an interim price of 1.27619 (near term support) and then at 1.25.
Note: always be careful of stop loss hunting, and or fake outs especially in breakout/ momentum trading strategies.
An alternate view: If however EURUSD breaks through its resistance at 1.31175; then it can retrace further up to 1.33239 or then somewhere in between the levels of 1.31175 & 1.35200. There is a good possibility for this happening too, because whenever the open interest is heavily pitted in one direction, in this case the short side; then the market bounces back because of a lack of supply to fill those orders.
Please also note, we do not recommend to go long at a break of 1.31175 as the trend is clearly downward but it would be a good idea to sit out and wait for those levels to open shorts as the R:R will be a whole lot better.
In either case be mindful, fluid but yet strategic around the price levels mentioned and trade accordingly.
As of right now, it does seem that the pair might consolidate or retrace a little before continuing its downward trend. Technically we are seeing resistance at 1.31175 & support at 1.27619.
As a more immediate trade we have an inside day candle that got posted as a spinning top close to its lows; which in terms of price action trading could indicate two things:
1) Eurusd has bottomed out in the near term; and a break above 1.29864 (the high of Friday) could indicate a short corrective rally to 1.31175. A good trading idea would be to sell at resistance which will lead to a better R:R trade.
2) However; if that doesn’t pan out than of course the candles setup should be viewed as a continuation pattern; which according to price action trading has a higher probability of occurring. One can trade this as a breakout strategy by going short below the low of Thursday (1.29168).
Both trades should target an interim price of 1.27619 (near term support) and then at 1.25.
Note: always be careful of stop loss hunting, and or fake outs especially in breakout/ momentum trading strategies.
An alternate view: If however EURUSD breaks through its resistance at 1.31175; then it can retrace further up to 1.33239 or then somewhere in between the levels of 1.31175 & 1.35200. There is a good possibility for this happening too, because whenever the open interest is heavily pitted in one direction, in this case the short side; then the market bounces back because of a lack of supply to fill those orders.
Please also note, we do not recommend to go long at a break of 1.31175 as the trend is clearly downward but it would be a good idea to sit out and wait for those levels to open shorts as the R:R will be a whole lot better.
In either case be mindful, fluid but yet strategic around the price levels mentioned and trade accordingly.