Bearish Confluence on EUR/USD?

Trade Idea: 2012-8-8 23:20

EUR/USD Daily Chart

Will you look at that?!? Sexy, ain’t it? EUR/USD, after touching the 61.8% Fibonacci retracement level, formed two dojis. Right after that, a bearish candlestick formed, telling me that the pair could be headed down. To add to my downside bias, there also seems to be a bearish divergence going on as price has been making “lower highs” while the Stochastic has been “higher highs.”

I believe that the fundamentals are also in my favor. Yesterday markets were once again reminded that the European debt crisis is still far from being over. The euro gave up ground to most of its counterparts following rumors that the ECB would hold off purchasing bonds until the German Constitutional Court approves the ESM. On top of that, S&P also lowered its credit rating outlook for Greece from stable to negative.

Sure, the shared currency sometimes rallies when risk appetite is up. But looking at the bigger picture, both fundamentally and technically, I think that markets are still bearish on the euro. That’s just me though!

Because my technical and fundamental analysis have lined up, I’ve decided to sell at market. I’m ultimately aiming for 1.2100, but I’ll be taking part of my position every now and then if the trade goes my way. As for my stop, I’ve placed it 100 pips away, just a couple of pips above the 61.8% Fib.

To recap:

Sell at market (1.2380), PT 1 at 1.2200, PT 2 at 1.2100, SL at 1.2480. Risk disclosure.

There ya go! That’s my trade idea for today. What’s yours?



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  • Ben

    Hi ,Huck I follow you. I also sell the GBP/USD at resistance 1.5700.

  • pedram

    And add the 50day MA sitting above dojis.

  • RobertoK

    I did take this trade yesterday, I had an order for 1.2380 level short which got filled today during the Asian session. Just closed it taking 45 pips. Not feeling strongly bearish on the EUR/USD. Even though the Daily chart is still bearish, Its been making small bearish runs all week so I didn’t wanna hold on to it through New York today. Another reason is because Am looking for a long set up to unfold in the GBP/USD as well. Looking to get in at the 1.5620 level aiming for the 1.5720 resistance. If that happens then we might see buying in EUR/USD as well.

  • artsedge

    I`ve joined this as well it looks like a good call am 50 pips up will you move your stop loss down – what will your tactics now be.

    • huck

      I’m trading the daily chart so I will be holding on to my trade. As for my stop, I’m thinking of moving it to breakeven. I’m still analyzing the charts though.

  • osubeav

    Noticed the resistance on the fib level as well, took the short. Picked up 60 pips. Nice call

  • Granticus_Maximus

    Shucks… I knew I should’ve jumped in on this one with you Huck! XD …looking good so far!

  • Swetrader

    Done the exact same

  • bic_rule

    Very nice .. i already jumped in for more than a reason : 1) confluence of two andrew’s medianline 2) fibo 61.8% 3) breakdown of monthly pivot 4) divergence with AC indicator

  • huck

    Thank you for all the feedback guys! 🙂

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