Euro Counter Trend Channel
The EUR has been making headlines with the fiscal difficulties some of their member countries face. This has stressed the outlook of the single currency and caused it to fall against the other major currencies. For example, the EURUSD exchange rate has dropped nearly 6% or 800 pips in the past 4 weeks! The price has increased this morning which offers traders an opportunity to enter into this pair in the direction of the daily trend.
The Trading Opportunity
The 1 hour chart shows prices near the top of an upward sloping counter trend channel. Additionally, there is horizontal resistance near 1.4135. We have 2 pieces of resistance converging in the same area offering up a zone to sell into.
Enter a sell short opportunity between 1.4085 and 1.4130. Place a stop just above the orange resistance line near 1.4140. Look to take profits at least twice the distance to your stop level. This would have you exiting the trade near yesterday’s lows of 1.3968. An aggressive trader could hold on in anticipation of a break below 1.3968 in attempt to lock in additional gains.
Jeremy Wagner contributes to the Instructor Trading Tips articles.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.