The Euro lost some major ground this week because of a downturn in the U.S. Stock market. The fear is coming back and it appears as if the recovery that everyone was so excited about is not happening as expected.
Lets go straight to the daily chart and see what we have.
We can see that the pair has been trending upwards for some time now. Also notice the blue trendline is currently being tested. If we see a break of that trendline on the daily chart we could see more downward momentum for quite some time.
The current support level is 1.4700 and that has been tested twice in the last week. If we see that break to the downside next week the next support level is 1.4479.
To Learn more about what is going on in the pair for economic data check this post by Earn Forex. There is also talk about the tables turning for the Dollar at Forex Crunch.
This pair could bounce off 1.4700 and keep moving back up, but I personally think it will move down because I think that the U.S. Stock market is way over priced right now because of all the hype over the recovery. So, I will be ready for a bounce off of the 1.4700 level but I am expecting that trend line to break.
When the 1.4700 level breaks or when the trend line breaks on the daily chart enter short. Put a stop over a recent resistance level and place your targets.
I open multiple positions so that I can take profits off the table early on and I can also let the trade run for much longer gains. So once my first target is made I move my stop to above break even and let the trade ride for maximum gains.
Remember if you do open multiple trades make sure that you use proper money management. Use less than 5% of account balance for all open positions. Not just one position. So what I am saying is don't trade 5% per trade. 5% for all open trades combined.
To see additional technical analysis check out this post by Mohammed Isah
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