With QE having started on the 9th of March and the Greece situation still being unresolved, I remain fundamentally bearish on the Euro. Not to mention the strong USD, which is weakening the Euro as well. I believe it will continue to be sold off against most other currencies, including the Yen. This pair has been ranging in a 290 pip wide bearish parallel channel on the hourly timeframe for over 13 days, having provided two clear opportunities to short it at the upper trend line. Last Wednesday the pair broke below a bearish daily support line that started September last year and had been tested three times already.
It then traded sideways for about a day, creating a double bottom before popping back above this daily trend line. After reaching the top channel line again, it started dropping fast, once more breaking below and closing below the daily trend line as well as an hourly support level where previously the double bottom had formed. This strong bearish move was followed by two consecutive tests of the broken hourly support, which acted as resistance. In between these tests, the pair printed a new low. This provides us with a new opportunity to enter short and this trade candidate features on my watch list. Provided the “weekend gap” does not disturb the picture, I will be looking to sell this pair at this level after the Asian open.
SL goes 10 pips above the daily trend line for extra security. TP1 = trade risk, TP2 = where the lower channel line converges with the 125 handle, which is a psychological price level. In terms of trade management, when TP1 is hit I would take profit on 1 position and roll my stop loss to breakeven, enjoying a risk free trade hunting for TP2.
There are 225 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 2.3!
It then traded sideways for about a day, creating a double bottom before popping back above this daily trend line. After reaching the top channel line again, it started dropping fast, once more breaking below and closing below the daily trend line as well as an hourly support level where previously the double bottom had formed. This strong bearish move was followed by two consecutive tests of the broken hourly support, which acted as resistance. In between these tests, the pair printed a new low. This provides us with a new opportunity to enter short and this trade candidate features on my watch list. Provided the “weekend gap” does not disturb the picture, I will be looking to sell this pair at this level after the Asian open.
SL goes 10 pips above the daily trend line for extra security. TP1 = trade risk, TP2 = where the lower channel line converges with the 125 handle, which is a psychological price level. In terms of trade management, when TP1 is hit I would take profit on 1 position and roll my stop loss to breakeven, enjoying a risk free trade hunting for TP2.
There are 225 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 2.3!
You don´t need to be a weatherman to know which way the wind blows - B. Dylan