A move to the previous weekly/monthly low of 1.05000 is very likely on the EU and beyond that, a move to the bottom of the downward moving channel of around 1.03400 would not be surprising. Likewise, it would be very likely that the Dollar retests weekly/monthly highs at around 12219 as the EU retests the previous lows and further more, a move to the top of the upward moving channel would not be surprising to see on the Dollar either as the EU moves to the bottom of its respective channel.
I would like to enter into a short swing position to ride this EU to the downside, at least to the previous lows @ 1.05, but I don't want to sell this pair at its current price. Rather, I will take an if-then approach to my entry and if the market makes one final run up to retest the top of the channel I will look to take a short position upon seeing buyer failure and significant momentum to the downside. I will place my stops just above the previous swing highs of the market and look to hold the position to the previous low at around 1.05. in mind that this will not be a clean move to the 1.05 figure, the market will buck and bow and find support along the way scaring many retail traders into taking profits early, only to allow the big boys better entries for their short positions as the market inevitably moves down to the 1.05 figure. If the market follows this if-then thought process that I have presented and provides us with the entry that we are seeking, be smart and patient and ride this bad boy out to our targets.
As always, Please note the following rules below for entry to the downside:
Price action making one more attempt to the top of the channel
Price action picking up some momentum after finding the top which, being in the channel, should be lower than the previous swing high
Enter on momentum after the first two points occur
Look to profit at around 1.05
Stop loss just above the previous swing high
This trade will be rendered invalid if the first rule is not met, for example if price action breaks out of the downward moving channel to the upside, however so long as price action remains within the channel the move to the downside still has potential. This swing position will just be rendered invalid if this set up does not occur. If this set up does not occur I will follow the price action carefully and look to scalp the market as it makes its move down to the 1.05 figure and will provide ideas along the way.
If you find yourself liking my style of trading please feel free to follow me as I will post potential trades like this rather frequently.