EUR/USD Trading Strategy: Placed Order to Short at 1.18837

  • The fundamental and technical checklist is now complete for a EUR/USD short setup
  • Prices below optimal entry point, order to sell EUR/USD has been placed at 1.18837
  • Stop will be a daily close above 1.19397 while the target of this trade will be 1.1718

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In my last analysis, I setup the foundations of a fundamental argument to enter short EUR/USD. However, before doing so, I opted to wait until the US jobs report crossed the wires due to the risk of volatile price action. With that now behind us, an optimal technical aspect is needed before committing to a trade.

On this front, EUR/USD cleared below a key support level I identified around 1.1913 which is the January 9th low. Simultaneously, what was originally positive RSI divergence faded away showing that momentum to the downside is now once again resuming. This fundamental and technical combination now gives a compelling argument to enter short.

The target of this trade will be a combination of the November/December 2017 lows around 1.1718. A stop will be placed on a daily close above the previous candle high at 1.19397. In this setup, I opted for a 3-to-1 risk-reward ratio which makes my entry point 1.18837.

At the time of this writing, prices are below my optimal entry point. With that in mind, an order has been placed to short EUR/USD at 1.18837. I will monitor this trade on a daily basis and if necessary, adjust my entry depending on how the daily candles unfold.

EUR/USD daily chart with short setup

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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

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