EURUSD Short

Trading Discussion
1

EUR/USD, 4-Hour Time Frame

Long or Short: Short
Entry Point: 1.3280
Stop Loss: 1.3370
Profit Target: 1.3120
Trade Explanation:

There is a pennant forming on the EURUSD 4H and daily time frames.

EURUSD pennant.jpg700×451 67.9 KB

This means we could be due for a breakout, but which way?

I believe we will break out to the downside, for two reasons.

  1. EURUSD is strongly correlated with GBPUSD, and the two are currently heavily diverged:

GBP correlation.jpg700×540 64.5 KB

  1. The EURGBP has hit resistance and formed a pin bar on the weekly chart, indicating a possible reversal:

EURGBP weekly.jpg700×554 78.5 KB

I would place a sell stop just after the break of the pennant, with a stop loss at the recent high.

I would trail the stop at around 50 pips and pay close attention to levels of past support / resistance, especially at around 1.3250, which showed resistance when the pair rallied on the 10/11th Jan.

4

Sorry, there were two typos:

Entry: 1.3280
TP: 1.3120
SL: 1.3370

Profit: 160 pips
Risk: 90 pips

5

What make’s you think that the GBPUSD 1.5820 level wont hold like it did in November? Also for the bulls on EURUSD there is an inverse H&S pattern on the weekly where if it breaks past the 1.33 it could soar.

On the daily and weekly GBPUSD is overbought as well indicating a possible support and swing back up in line with the bullish H&S forming on the EURUSD.

Just giving you another perspective

6

Thanks for your perspective, you have made valid points.

The GBPUSD level may hold. As I said, the pair are currently diverged, because they have moved in opposite directions over the last week or so, and as the EURGBP looks like it might turn around, I’m hoping they will move in opposite directions again to come back in line. (GBPUSD go up and EURUSD go down).

Your right about the inverse H&S on the weekly EURUSD, maybe it will soar. I which case I will be wrong. :frowning: If I knew how to be right all the time I’d be a very rich man. :wink:

7

haha yes. We never know, it’s so sad.

8

Brutal that she just took of like that. We’re you able to get a piece of the recent rally?

9

Yes, luckily i had a buy stop just above the pennant too, so I’ve caught almost all of it. I’m still surprised that cable and fiber are still so far apart.

10

Is cable and fibre a nickname for EUR/USD and GBP/USD? I take it cable relates to GBP?

11

Yeah old nicknames. I prefer to ditch them myself as it always causes confusion to new people. And it takes more effort to spell fiber and cable than it does EUR and GBP.

I suppose it gives people the illusion that they are more educated on their knowledge of trading.

12

Yes, makes it a bit more fancy … apparently. Just confuses me until a few weeks ago and it sunk in.

Cable is related by name to the old telegraph cable they laid between England and the US.

Fiber was called so as the Euro currency was the “newer” technology to the old Cable.

Being in the electrical game myself (High Voltage Operator), it made sense to me straight away when I read the above analogy.

Similar to Mastergunner99, I refer to them as EU and GU pairs. Since I only normally trade 3 pairs (AU as well), it is simpler for me