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Looking for short-term forex trades this week? I think I found a pretty good technical setup on EUR/USD‘s 1-hour chart.

While I’m still waiting for an opportunity to short GBP/USD, I decided to take a look at EUR/USD’s chart. After all, the ECB’s policy decision is only a few days away and euro pairs are bound to see at least a bit of volatility.

EUR/USD: 1-hour Forex Chart
EUR/USD: 1-hour Forex Chart

This week I’m looking at a possible short-term long trade for EUR/USD. On the 1-hour chart we can see that the 100 SMA is about to cross above the 200 SMA, something that had been a pretty good indicator of trend shifts at least twice since January.

On the fundamental side, Germany’s worse-than-expected reports have strengthened speculation of another ECB rate cut and possibly more stimulus from Draghi and his friends this week. Heck, Draghi had all but announced more easing in last month’s monetary policy statement! But will the ECB’s moves be enough?

Recall that last December more easing from the ECB led to a euro RALLY after the investors surmised that the latest set of policies won’t be enough to make a dent in the euro zone’s inflation problem. Will that be the scenario again this month?

In any case, I’ll wait for the actual crossover, as well as follow-through, before I make any entry orders. If EUR/USD breaks above the 1.1050 minor psychological area after the SMA crossover, then I might go long and aim for the previous highs.

Then again I could also wait for the ECB’s actual decision, as any potential volatility from the event could mess up the technical setup anyway.

What do you think? Is it time to buy EUR/USD? Short at a downside break? Or wait a bit more for catalysts?

Don’t hesitate to share your two cents!



P.S.: Remember to never risk more than 1% of a trading account on any single trade and to adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Better yet, read the Risk Disclosure!

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