Euro Set To Drop From Resistance Zone
Charts · 4 in this plan
The idea
This trade looks for the Euro against the US Dollar to fall after reaching a key price area where sellers often step in.
Daily (D1): The daily chart shows the Euro in a mostly downward trend, with recent price action struggling near a resistance level indicated by the red line at 1.13000. The price action consists of several candles showing hesitation and pullbacks when approaching this area, suggesting sellers may defend this zone.
Daily (D1), second chart: This view on the daily chart confirms a clear trading range where the Euro moves sideways just below the resistance. The volume bars at the bottom show increased trading activity on down days, supporting the idea that sellers are stronger near this price level.
Daily (D1), third chart: The daily candles clearly highlight the critical resistance at 1.13000 and the recent attempts to rally toward it failed. The current level for the pending sell limit order at 1.12029 is just below this resistance, suggesting a short entry awaits a price pullback before potentially resuming the downward trend.
5 minutes (M5): The very short-term chart reveals recent price hesitation and a sharp downward movement, indicating that sellers are active once prices approach the limit order level. The increased volume on down candles hints that momentum could follow through lower if the order is triggered.
Market conditions: Important economic announcements are due around the trade date, including speeches by a US Federal Reserve official and the European Central Bank president. The US inflation data (CPI and core CPI) released the same day could have a strong impact on the US Dollar, likely affecting the EURUSD movement.
Risk: This trade might not activate if prices do not rise up to the sell limit order level. After entry, an adverse move above the 1.13000 stop loss level would cause the position to close at a loss. The take profit target near 1.10000 offers a risk to reward ratio of over 2:1 but depends on sustained selling pressure.
Not financial advice.
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