I think I’m having a déjà vu! I spotted a setup on EUR/USD similar to the one I took last week. The question is, will it have the same outcome?
Falling trend line, check! Fibonacci retracement levels, check! Yeah, this setup looks pretty much the same as my last trade on EUR/USD. I earned a few bucks on that trade, so I’m thinking that perhaps this one will turn out well for me too!
I’m eyeing the 1.2800 handle as my entry, since the Fib levels and trend line coincide nicely around that area. Once reversal candlesticks materialize, I’ll be ready to pull the trigger. I’m planning to place my stop at 1.2850.
Should price reach that level, it will have already broken resistance at the Fib levels and trend line, invalidating my trade. Meanwhile, for my profit target, I’ll be aiming for 1.2700.
I think the trade is also fundamentally sound. We’ve been hearing a lot of negative news from the euro zone with the most notable one coming from the European Commission. According to the EC, this euro zone would most probably remain in recession this quarter (Q4).
There’s also the bearish ECB Interest Rate decision. While the central bank didn’t cut rates or implement any new easing measures, they did say that inflation would fall below their 2% target. In addition, the central bank seemed very pessimistic about the region’s growth too.
I’m also keeping an eye out for the University of Michigan consumer sentiment survey too. If it comes in better than expected, EUR/USD just might reach my desired entry level!
Short EUR/USD at 1.2800, SL at 1.2850, PT at 1.2700. As usual, I will risk 1% of my account. Risk disclosure.