EUR/USD is trading below 1.4250 today. Euro has met resistance during the recent uptrend at 1.4250, a major support and resistance level which has been a reference level for the most popular currency pair in the last 5 years. About 8 times EUR/USD has either found support or resistance at that specific level over that period, making it a very significant level to watch out for during forex trading. Now that Euro’s short term uptrend seems to have ended, shorting in order to make money of the probable downtrend is likely to pay off. Besides, the reversal pattern that is being completed by today’s candlestick adds more confidence in betting on US dollar against Euro.
Euro starting trading on the week’s open at around 1.4150 and began falling right from the start of the day. It tested the 1.40 level in the first 10 hours but the support level didn’t hold 2 hours ago and EUR/USD resumed the downtrend almost reaching out 1.39. Forex traders should have identified the downtrend by now and perhaps are looking to close out their day trading positions a couple of hours before the US market calls it a day. Long term investors who have traded against Euro are expected to hold onto their positions for a week or more.
Given the fact that the 12-month green upwards trend line has been broken, I am not expecting to see Euro climbing to higher prices any time soon. In fact I wouldn’t be surprised if the forex pair declines to 1.30 or below, depending on the European rescue plans and Greece’s fate. Therefore, I’ll be on the lookout for short entry points in the hourly forex charts.