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Hey, forex friends! Are you seeing what I’m seeing on EUR/USD’s 4-hour chart?

After breaking above the descending channel and finding resistance at the 1.1400 mark, EUR/USD is now just below the 1.1300 major psychological handle.

Is the 1.1300 mark the only reason for EUR/USD’s current consolidation? I don’t think so!

See, the area is also near this week’s bottom weekly ATR, 100 and 200 SMAs, and a possible 50% Fibonacci retracemennt on the 4-hour time frame.

EUR/USD 4-Hour Forex Chart
EUR/USD 4-Hour Forex Chart

This might be a good setup for you if you’re expecting the dollar to tank during the NFP release.

Thanks to last month’s disappointing numbers and leading indicators such as the ISM manufacturing PMI, the ADP report, and Challenger job cuts data, a lot of traders are expecting much stronger labor market numbers in June.

The thing about high expectations is that there’s a higher probability of disappointment. Game of Thrones Season 8, anyone?

Unless June’s releases meet analysts’ already high expectations AND May’s significantly weak prints see some glow up, then traders could price in an even more dovish interest rate track from the Fed. That’s saying something considering that odds of a July rate cut are currently at 100%.

I’m not planning on buying the euro at current prices, though. For one thing, the ECB is right up there with the Fed in the dove department. This week’s releases from the euro zone aren’t looking so hot either.

And then there’s the U.S.’ 4th of July weekend, which might mess with the “usual” probabilities around an NFP release. Traders busy with picnics instead of charts could lead to a dip in volume, which could lead to cray volatility for EUR/USD.

For now, I’ll be looking for upside momentum above the 50% Fib and 1.1300 area before I consider risking 0.50% of my account on a long trade. If I do enter, I’m placing my stops below the 200 SMA and aiming for at least last week’s highs near 1.1400.

What do you think of this plan? Are you considering something similar for your trades?

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Reviewing my 2018 Forex Trades
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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.