Euro Faces Downside Pressure Near Key Level

This trade idea involves selling the Euro against the US Dollar at a carefully chosen price point where the market is expected to move lower after a short pullback.

Daily (D1): On the daily chart, the Euro has been trending downward recently, staying below the average price line for the last 21 days. This suggests that the overall pressure on the Euro remains bearish and the market could continue sliding lower from here.

1 hour (H1): The first hourly chart shows the Euro still below its average price for the last 21 hourly candles, confirming ongoing weakness. The RSI, which measures momentum, is near the lower end, indicating that the selling pressure is quite strong but not yet exhausted.

1 hour (H1), second chart: The second hourly view displays the Euro below a longer-term average price line spanning 200 hours. The Stochastic indicator, which shows how much the market is overbought or oversold, is also in the low area, implying sellers might maintain control and the price could keep falling.

15 minutes (M15): The short-term chart highlights the Euro bouncing up three times after a strong fall, with the trader setting a sell limit just below the last bounce. The price is under the average of the past 50 fifteen-minute candles, indicating the recent upward moves are likely short-lived, pointing to a potential drop.

Market conditions: Two important US inflation reports, PPI and Core PPI, are scheduled for release before this trade opens at 13:30 UTC. If these figures show less inflation, the US Dollar might weaken and the Euro could rise, risking the sell order not filling. However, higher inflation data could strengthen the Dollar and support a Euro decline.

Risk: The trade has a tight stop loss to limit losses if the Euro moves above a certain level, roughly near the recent short-term highs. The profit target is set for a moderate drop, about half the size of the stop. This means if the price rises instead of falling, the loss will be controlled, but the gain is smaller if the market moves as expected.

Not financial advice.