Identifying Entry for EUR/USD Bearish Momentum
Bearish Breakout Opportunity in EUR/USD Targets Major Monthly Support
Monthly Timeframe
Based on the long-term downtrend remaining intact on the monthly chart, I would recommend entering a short or sell position in EUR/USD with a bearish bias.
Sell Level: The pair is currently testing the 1.02 level, which is major long-term support from the late 1990s/early 2000s. I would look to short the pair on a break below this level.
Stop Loss: Place the stop loss above the next resistance level at 1.03 to limit risk to the potential trend reversal area.
Initial Take Profit Target: With long-term monthly support now at 1.00, I would initially take partial profits if the pair reaches this psychological level.
Secondary Take Profit Target: A break below 1.00 could see further accelerated selling pressure. I would aim to cover the remainder of the short on a close below 1.00 to capitalize on the long-term downtrend momentum.
By shorting EUR/USD on a break below the critical 1.02 support level, with predefined risk management levels, this trade aims to benefit from the prevailing bearish momentum indicated on the monthly chart technicals. The multiple support break targets provide layers to take gains and manage risk in the context of the bearish primary trend.
3-Month Timeframe
The 3-month chart shows the pair in a short-term downward trend since late 2021. It put in higher highs and higher lows from mid-2018 to late 2021, demonstrating an uptrend.
Support/Resistance: Key support is at 1.0350 level, broken in May 2022. Resistance is at the descending trendline coming off the 2021 and early 2022 highs around 1.1140 currently.
Moving Averages: Price remains below the 20-period and 50-period simple moving averages (SMAs), adding to the bearish bias.
Recent Price Action: In July 2022, the pair saw a bounce off 1.0350 support but has since rolled over at the descending trendline resistance. This rejection signals a continuation of the short-term downtrend.
Recommendation: With the bearish crossover of SMAs and confirmation of resistance, swing traders could look to short EUR/USD on a close below 1.1050 with a stop above 1.1140. Initial downside profit targets are at 1.0800 and 1.0500.
Risk Management: If 1.1140 resistance holds as support, the bias would be neutralized. Tighten stops to break even on a 1.1050 close.
Please share your thoughts
Monthly Timeframe
Based on the long-term downtrend remaining intact on the monthly chart, I would recommend entering a short or sell position in EUR/USD with a bearish bias.
Sell Level: The pair is currently testing the 1.02 level, which is major long-term support from the late 1990s/early 2000s. I would look to short the pair on a break below this level.
Stop Loss: Place the stop loss above the next resistance level at 1.03 to limit risk to the potential trend reversal area.
Initial Take Profit Target: With long-term monthly support now at 1.00, I would initially take partial profits if the pair reaches this psychological level.
Secondary Take Profit Target: A break below 1.00 could see further accelerated selling pressure. I would aim to cover the remainder of the short on a close below 1.00 to capitalize on the long-term downtrend momentum.
By shorting EUR/USD on a break below the critical 1.02 support level, with predefined risk management levels, this trade aims to benefit from the prevailing bearish momentum indicated on the monthly chart technicals. The multiple support break targets provide layers to take gains and manage risk in the context of the bearish primary trend.
3-Month Timeframe
The 3-month chart shows the pair in a short-term downward trend since late 2021. It put in higher highs and higher lows from mid-2018 to late 2021, demonstrating an uptrend.
Support/Resistance: Key support is at 1.0350 level, broken in May 2022. Resistance is at the descending trendline coming off the 2021 and early 2022 highs around 1.1140 currently.
Moving Averages: Price remains below the 20-period and 50-period simple moving averages (SMAs), adding to the bearish bias.
Recent Price Action: In July 2022, the pair saw a bounce off 1.0350 support but has since rolled over at the descending trendline resistance. This rejection signals a continuation of the short-term downtrend.
Recommendation: With the bearish crossover of SMAs and confirmation of resistance, swing traders could look to short EUR/USD on a close below 1.1050 with a stop above 1.1140. Initial downside profit targets are at 1.0800 and 1.0500.
Risk Management: If 1.1140 resistance holds as support, the bias would be neutralized. Tighten stops to break even on a 1.1050 close.
Please share your thoughts
The rejection of the pair at the upper resistance trendline in early July would have been a bearish confirmation of the pennant breakdown. This breakdown signaled the resumption of the prior downtrend in place since late 2021 on the 3-month timeframe.