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Possible EUR/USD trade

Posted on 21. Sep, 2009 by admin in forex signals

This is an update to my last post about the EUR/USD, which you can read here. As mentioned, I am looking for a short entry on the EUR/USD, and things start to look better. However, nothing is certain. If I do take the trade I will post it on twitter and send it out to my newsletter subscribers.

We have had the break above 1.4700, and even above 1.4725 which was a strong resistance level. It actually went all the way up to 1.4766 and then back down to its current level at 1.4710. According to my last post, this was actually just around the level where I wanted to enter a short trade, but at that moment, I was not too sure about it. As I mentioned in my last post, the short term fundamental outlook looks to be somewhat in favor of a stronger USD, but yet again, the picture is rather mixed. The negative aspect of this trade (if I take it) is that it is going directly against the trend. Hence if I do enter, I will do my best to let it run, if it goes into profit.
Otherwise there is no point in trying to pick the top. But this all depends on how the market reacts.

On the 4-hour chart we can see some consolidation around the 1.4700 area, and there have been some spikes up and down. Hence you don’t want to try and scalp trade this area. One the daily time frame, we can see that Friday turned out to be a black “hanging man” (That sure does sound wrong, but I did not invent these terms). That is: a candlestick pattern where a small real body forms at, or very near the upper end of the candlestick’s range, without any upper shadow and the lower shadow is typically, at least twice the length of the real body. The Friday candlestick has a real body of 30 pips, and a lower shadow of some 70 pips. This is recognized as a candlestick reversal pattern. Furthermore, if we look at the weekly chart, we can see that we are just around the same level as the last high, where there was a sharp reversal; actually this level has been broken, but this is what I expected, due to some break out fading. I still think we might see one spike higher before a reversal, but as mentioned above, nothing is certain. However, this is how I am going to trade it. If we come back up between 1.4750 and 1.4800 I will look for a short entry. This will probably be the last trade I post on twitter, and from then on, you will have to subscribe to my newsletter, in order to get my signals; more on this later. What are your thoughts on the EUR/USD? Will the trend continue or will we see a reversal?

Tags: forex signals, my signals