EUR/USD – Short Trade Idea

Technical

EUR/USD is currently testing a key monthly resistance level at 1.09900. Price has previously rejected 3 times from this zone with each rejection seeing a bearish rally to at least 1.09000.

The 1-hour timeframe shows price moving in a rising channel structure, with prices currently breaking below. A bearish candle close below this channel could see bearish momentum building , thus opening the possibility of a revisit to 1.09000.

The 8-day and 20-day EMA at 1.09812 are also providing an intraday resistance.

Fundamental

Comments by the Bank of France Governor, Francois Villeroy de Galhau who signaled that he would like to see limits on the 750 billion-euro plan loosened even more , sent the euro higher.

However it is expected this optimism will fade into the EU27 meeting as a lot of uncertainty remains regarding its passage. For example, how this 750 billion euro plan will go forward despite the purchasing aspect of the programme being deemed as outside the european union regulatory framework as ruled by German judges.

Trade Details

Potential Entry: When/If prices close below the mini channel, this is likely to be around 1.09800.

Potential Targets:

Potential Stops: At around 1.10076

This trade carries a risk to reward ratio of 2.18, with a maximum potential loss of 30 pips and a maximum potential gain of 65 pips. We strongly advise you place stop losses at entry once a trade is at least 15 pips in profit.

Trade Updates

• EUR/USD has experienced a sharp fall in earlier hours of the London Trading session, seeing TP1 and TP2 being hit which is 25 and 40 pips from the proposed entry, respectively. It is strongly advised to make this a risk free trade.
• Prices reverse back to entry shortly after meeting TP2, this trade is now closed.