Forex Setup: Retracement on EUR/USD?

I’m seeing a lot of potential retracements on the major forex pairs this week! Here’s what I spotted on EUR/USD’s chart.

EUR/USD 1-Hour Forex Chart

EUR/USD 1-Hour Forex Chart

Is it just me or is there a possible retracement play on EUR/USD’s 1-hour time frame? As we can see on the chart above, EUR/USD managed to find support at the 1.0850 area after getting slaughtered by the dollar bulls early this week.

Well, I don’t think that the euro bears are done just yet. See, despite rumors of a staff-level accord for Greece and a possible weekend deal, I don’t think that the Greek and the rest of the European leaders will be able to reach a solid agreement anytime soon. In fact, we probably won’t see any real development until the European leaders themselves (not the Greek officials) hint at one.

On the dollar’s side I’m looking for more of the strength that we’ve seen since Yellen hinted at a 2015 rate hike last week. It won’t be a smooth uptrend though, especially when Uncle Sam’s GDP due in a bit is expected to show contraction.

This is why I’m waiting for a better entry price to short EUR/USD. I’m looking at the 1.1050 area, which is right around the 200 SMA and 50.0% to 62.8% Fib resistance. I’ll probably set my stop above 1.1200 and aim for new lows for the pair. I’m planning to enter a trade manually, as I’d like to wait for the GDP report and be ready in case a Greek deal IS reached over the weekend.

What do you think of this retracement setup? Would you take it around the same levels?

Thanks in advance for your advice!

XOXO,

Huck

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