Recommendation: LOOK TO SELL SHORT
Current Trend: Short-term sideways to up. Med-term up. Long-term sideways to up.
Strategy: Sell short a close below 1.1821, or a clear reversal week down.
(Daily)
Chart Setup: The euro moved perfectly to our upside target and then gave a bearish reversal candle there on Tuesday. There is a good chance of a sizeable correction to come now, but more confirmation is needed.
- Its daily RSI (on top) is giving a negative divergence from its overbought warning of a correction to come.
Strategy Details: Sell short the EUR/USD on either a close below 1.1821 (Thursday’s low), or sell short on a clear reversal week down. Do whichever happens first. (Note, conservative players can wait for a close below line 1, 1.1710, to sell short).
Target: While there is short-term support at 1.1710 (line 1), and prior support at line 3 (1.1750), I’m looking for a large correction (multi-month) down to 1.1480 and potentially 1.1300.
Stop-loss: A close above its recent high of 1.2069. Short-term traders only, tighten stop to a breaking of its prior one-day high from 1.1750.
- But medium-term players continue with the original stop, for the larger drop.
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