Today on EURUSD – Daily and H4 charts support Short trades.

On the Daily chart above, toward the end of last week, the bulls finally succumbed to strong resistance levels. One of the resistance levels is the upward channel: we would observe that, although price seemed to have initially broken above the upward channel, it could not sustain its upward surge, and consequently, a strong reversal candle formation (railway tracks) was formed at the close of last week Wednesday’s candle. Currently, we have a sign that price has probably resolved to have a downward retracement: the most recent Daily swing low @ 1.4610 (which we've highlighted using the blue broken line) has been broken downward. We expect price to continue its downward retracement toward the lower edge of the channel; however let’s keep in mind that there are a couple of support levels – previous Daily swing highs – that the bears might have to break through to reach the channel’s lower edge. In all, from a day-trade perspective, with the support of the H4 chart, our bias is to seek Short trade setups on the Hourly chart.

On the H4 chart above, price has broken the most recent swing low @ 1.4622 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. We would also observe that price is currently forming lower highs and lower lows: another good formation confirming the bears’ control. The white horizontal line @ 1.4723 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Please NOTE: We currently have an Hourly Short trade setup with a nice resistance-confluence around the fib 50% ret. @ 1.4641 (Primary profit target @ 1.4523; Initial SL @ 1.4721). If this level is suitable for you – in terms of reward:risk, don’t hesitate to take the trade. Please manage your trade properly: don’t risk too much, scale out your profits and adjust your stop loss when necessary.