I have already said a number of times that eurusd has been in a short term downtrend and selling rallies is the best policy under such market conditions. Euro has been rallying into London open and right after the open at around 07:14 GMT price hit the highest point for today. It then proceeded to form a reversal pattern that can be clearly seen on both 15 and 30 minute charts.
Furthermore, you can see that resistance coincided with 200 ema on 30 minute chart. This added extra confirmation about the strength of the sell signal. Entry point was at 1.1060 with a stop loss at 1.1075. Take profit is at yesterday’s lows: 1.1020. As you may see risk/reward ratio is good. 15 pip stop loss and 40 pip take profit.
I will take extra caution today as we have important data coming from US. At 12:30 US CPI is to be released and 18:00 GMT FED minutes. Both may have tremendous impact on both Euro/Dollar and Pound/Dollar exchange rates.
So, I might close my short at or before US session begins, because 30 minutes into it CPI comes out. You don’t want to carry around a position at such events, unless you are a swing or trend trader and hold your trades for weeks and possibly months. Volatility should increase as market is searching for direction and these numbers can surely give direction. Take care!
I will come with an update sometime around US session.
Reversal pattern on eur/usd 30 minute chart