On the Daily chart above, starting around the beginning of the last month in 2009, December, the EURUSD pair got caught in a very strong wave of a downward price movement which, most likely, was partly triggered by a negative MACD divergence observed on the Daily chart. The pair later had a shallow bullish retracement which met strong resistance about 20 pips away from a critical resistance level – a previous Weekly swing low @ 1.4480 (which we’ve highlighted on the Daily chart using the upper blue broken line).Observing current price movement, the bears seem set to continue their movement, however, there’s a critical support level – the most recent Daily swing low @ 1.4216 (that we’ve highlighted using the lower blue broken line), which we would like to see price break below to be further convinced of the bears’ resolve. In all, our bias is bearish. Conservative traders would probably wait for the break of the 1.4216 level before seeking any Hourly Short trade setup – supported by the H4 chart.
On the H4 chart above, price has breached the most recent swing low @ 1.4272 (which we’ve highlighted using the upper blue broken line) downward. That automatically sustains our bias in favor of a downward price move. However, we would notice price is struggling to stay below the 1.4272 level – a sign that the bears might currently be facing some hurdles; and that buttresses the suggestion discussed on the Daily chart that we would prefer price to break below a critical support level – the most recent Daily swing low @ 1.4216 (that we’ve highlighted on the H4 chart using the lower blue broken line) to be convinced of the bears’ readiness to keep moving. Price is currently about a 100 pips away from the 1.4216 level, hence, more aggressive traders might attempt to seek an Hourly Short trade setup while keeping in mind that the EURUSD pair is possibly, currently within the bulls’ zone.
The white horizontal line @ 1.4439 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.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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