Free Profitable Forex Newsletter
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Good Lookin’ Bearish Setup On EURUSD; Attractive Sell
EURUSD rose this week on variable factors, mainly related to the improvement of Brexit sentiment in the last couple of days. The pair reached the important technical area around the 1.1050 level (which we also talked about in our weekly analysis here), and the bullish attempt was rejected.
Today’s US economic data (Thursday) was robust and suggests that the Non-Farm Payrolls data due tomorrow (Friday) will be strong as well. Namely, it was the ADP Non-Farm Payrolls estimate and the much stronger than expected ISM Non-Manufacturing PMI that stopped the rally in EURUSD and lifted the Dollar broadly.
EURUSD was strongly rejected with a 45 pips hourly candle at the daily highs on the release of the strong ISM Non-Manufacturing index today. The reversal occurred right at the aforementioned 1.1050 resistance area (1.1030 - 1.1080 wider area) near the August lows - suggesting the top of this swing in EURUSD is probably in place now.
Firm US data and expectations for ECB easing to keep bearish EURUSD trend intact
The main focus for traders is now the actual Non-Farm Payrolls and other jobs data tomorrow. If the overall data tomorrow is robust, EURUSD is only likely to continue lower. Particularly, the average hourly earnings and the unemployment rate reports will also be closely watched. EURUSD will probably fall even if the numbers only meet the general expectations, while the pair would likely decline sharply if the data is robust and much stronger than the consensus
forecasts.
On the other hand, big disappointments in the NFP or other components of the jobs data will probably push through today’s highs instead and negate our bearish setup. Nonetheless, current price levels look attractive for establishing short positions as the risk:reward is excellent from here.
In addition, when we consider that the ECB meeting will take place next week (when they are expected to announce a big stimulus package to help the economy), it makes a short EURUSD trade even more attractive.
EURUSD bias remains bearish and if all goes as expected, the pair will probably revisit last the week’s lows near 1.09 and could even fall below them.
EURUSD is trading in a bearish channel on the daily chart. This week’s rally can be characterized as just a retracement since it clearly stays within the boundaries of the channel.
Furthermore, the rally was rejected at the resistance from the previous lows - a common continuation pattern inside trends (former support becoming resistance before the trend continues).
- Current levels of around 1.1030 are also attractive for a short entry
- Preferably try to enter as close as possible to the 1.1080 highs;
- While EURUSD may just continue lower, there is a possibility that the price may make another bullish attempt; which could give better levels to enter a sell trade.
Stop loss:
- Above today’s 1.1080 highs; or
- Above 1.1100 to allow more breathing room for the trade
Targets:
- 1st - The prior lows at 1.0925
- 2nd - The lower bound of the daily bearish channel in the 1.0850 area (which is also the big bullish gap from 2017 that was never filled)
Trade signals from the past week
- None (as we said in our email last week)
TOTAL: 0 pips in the past week
TOTAL: +1550 pips profit since October 1, 2018
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Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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