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Thread: Time to Short EUR/USD

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    Default Time to Short EUR/USD

    The USD has been under pressure for several weeks now and EUR/USD has run-up to its highest levels since it came into existence in 1999. More importantly, the USD index has effectively traded down to its lows from Dec. 2004 at 80.40 and I'm looking for this level to rein in USD weakness. In the fundamental realm, this extreme USD weakness appears unjustified and I'm switching gears and looking to trade EUR/USD from the short side, selling further rallies

    Looking at the EUR/USD, Friday's price action resulted in a doji on the daily candlesticks (also a doji on daily USD/CHF), which signals that the upmove may be stalling, with the potential to reverse lower. I would also note a doji on the weekly EUR/JPY candles and a outside-down day on daily EUR/JPY, suggesting a stall and reversal in that cross, too. Confirmation in the EUR/USD will come with a close below 1.3725/30 lows and more conservative traders should probably wait for that to occur.

    A more aggressive strategy would be to trade EUR/USD from the short side by selling 50% of a EUR/USD short at current levels 1.3784/87 and the second 50% on remaining strength to 1.3840, for an average short at 1.3812. Leave the stop over 1.3880, for a total risk of 68 pips. The upper limit of the overall EUR upchannel should limit gains to 1.3850/60. Option interest is reported to be large at 1.3830, and the hope is that the barrier there will be taken out and trigger a final stop-loss driven push to get short the second half of the position. I'm also looking to trade the EUR/USD around a core short position, meaning I'm looking to take profit on dips into the 1.3730/40 level until a daily close below 1.3725/30 confirms a top is in place, and selling any subsequent upside bounces. I'm anticipating that EUR/USD won't turn around instantly and we'll see several days of consolidative trading, allowing rallies to be sold and dips to be bought. But I'm keeping a core short position in case the larger reversal takes place more suddenly.
    Attached Thumbnails Attached Thumbnails gbpusd_daily.jpg   4-hours_eurusd.jpg  

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    Director of FXOpen Aus FXOjafar's Avatar
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    Please quote the source for your analysis. I know it's not your own.
    Jafar Calley - Director
    FXOpen AU Pty Ltd
    Level 26 • 1 Bligh Street
    Sydney NSW 2000
    Australia
    AFSL:412871 ABN:61 143 678 719
    http://www.fxopenaus.com

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    Default

    Forex.com bro.

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