Does this setup look familiar to you? Well, it should!
Just like in my setup last week, EUR/USD is once again near potential resistance levels at a 61.8% Fib and 100 and 200 SMAs on the 1-hour time frame.
As I mentioned in my trade review, I don’t think that the pair’s fundamental landscape has changed much since I first posted the setup. The euro is still plagued by geopolitical concerns and mixed economic data across the euro zone. Not only that, but Mario Draghi has made it clear that the ECB hasn’t ruled out the option of adding more economic stimulus. Heck, they had even hired a consultant for buying asset-backed securities! Meanwhile, the Fed is as cool as cucumber when it comes to sticking to its tapering schedule. The divergence is reason enough to short the pair on a longer time frame, don’t you think?
Now, I’m aware that I could avoided last week’s losses had I managed my position differently. So this time I’ll wait for price action to come to my entry areas. I’ll wait for the pair to reach the 1.3400 and wait for bearish signals and news before I manually pull the trigger. I’m thinking of risking 0.5% of my account and placing a 100-pip stop above the SMA.
What do you think of this plan?
XOXO and I hope you have a great weekend!