Technical analysis in currency trading shows signals for downtrend at the EUR/USD chart. Interactive Brokers forex trading platform can draw daily bars at the EUR/USD chart back to 2 years and that is sufficient to point out the upwards trend line that was broken in September. Since the EUR/USD uptrend ended in summer 2011 and sellers took control of euro, trading currency with forex trading tools such as technical analysis might have helped forex traders to short sell EUR/USD in November, when EUR/USD tested the trend line.
A double bottom at the EUR/USD chart might imply that the downtrend isn’t strong enough to send the currency trading below 1.3125. Yet, the 30-day exponential moving average is proven a strong resistance line when EUR/USD has tried some pullbacks. Friday’s candlestick at the EUR/USD chart was a red candlestick but without going more south than the Wednesday’s candlestick low. At this time, EUR/USD can either go to retest the trend line heading downwards at 1.40 or do a breakout and go much lower than 1.30. Being extra careful when trading currency such as EUR/USD is very important, so that forex traders don’t get trapped inside a strong trend going against them.
Traders should keep an eye to EUR/USD chart of shorter time frames in their forex trading platform, to pick up better entry points either for long or short positions. However, the long-term downtrend that EUR/USD is currently following has to be reminded of regularly, so that trend-following traders can make the most out of the technical analysis in currency trading.
Disclaimer: I’m neither long or short EUR/USD.