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Trading the EUR at Trend Line Resistance

By , Head Forex Trading Instructor
28 July 2011 18:07 GMT

The EURCHF has been entrenched in a multi-year downtrend. Prices are currently resting near a downward sloping resistance line connecting the highs since July 22. This offers a good opportunity to sell the pair at resistance.

Trading_the_EUR_at_Trend_Line_Resistance_body_Picture_1.png, Trading the EUR at Trend Line Resistance

(Created using FXCM’s Marketscope 2.0 charts)

Most traders like to trade the EUR and feel the longer term outlook of the EUR is weighed by their collective debt situation. Translate the EUR weakness into a pair that has been in a strong trend throughout the debt crisis…the EURCHF.

Reasons to sell the EURCHF:

-Downward sloping resistance line connecting the highs since July 22

-Horizontal support turned new resistance line at 1.1495 converging in the same area.

-CCI (Commodity Channel Index) is flat lining near the zero line indicating lack of buying pressure

Therefore, we have a trade set up based on simple technical analysis.

*Sell the EURCHF near the current market price.

*Set the stop loss just above the black line near 1.1535.

*Move your stop to break even if the price is successful in moving to 1.1405.

*Manually trail your stop at each subsequent swing high.

Additional educational resources

How to Trade with Support and Resistance Part 1

Trading Support and Resistance in Forex Part 2

Determining Risk to Reward Ratios

Jeremy Wagner contributes to the Instructor Trading Tips articles.

http://www.dailyfx.com/how_to_trade_forex/course_trading_tips

To receive more timely notifications on his reports, email jwagner@fxcm.com to be added to his distribution list.

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28 July 2011 18:07 GMT