By Russell Glaser
An early morning rally in light liquidity has sent the EUR/USD close to its downward sloping trend line, setting up an entry opportunity to go short.
Following a rise in the price of the EUR/USD during the Japanese trading hours, the pair is trading close to its downward sloping trend line that falls from the November high and has a contact point in mid-December.
Traders can use this point as a setup to go short on the pair that is in a clear downtrend since November. The trend line should act as a resistance to any further move higher.
The first target will be the 50% Fibonacci retracement level from the June to November move at a price of 1.3080. This area has served as a support level during the consolidation pattern of the past two weeks.
Further support will be the 200-day moving average which comes in today at 1.3040, as well as the November low at 1.2870.
A stop loss can be placed above the close of yesterday’s candle by 20 pips at a price of 1.3274, giving traders a healthy 5:1 profit to risk ratio.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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