By Russell Glaser – The pair has experienced a bit of a consolidation since reaching a low of 1.2150 last week. As such, the price has climbed close to the bearish channel that has formed on the daily chart, presenting a possible trade setup to go short on the pair.
Friday’s trading had the EUR/USD climbing to a daily high of 1.2450. This daily high was the third contact point for the downward sloping trend line, making it a significant trend line. A parallel line drawn below the price action displays a bearish channel. The long term downward sloping trend line is also displayed, taking into account all the price action for the bearish trend.
A trade setup to go short on the EUR/USD is forming as the price moves closer to the upper boundary of the channel. Going short at a trend line can be one of the best ways to enter into a trending market.
A protective stop can be placed above the resistance level (R1) at 1.2390 and the support level (S1) at 1.2150 can be used as a price target. At the current spot price of 1.2315, this would give roughly a 2:1 profit risk reward.
Forex Market Analysis provided by Forex Yard.
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