On the weekly chart, EUR/USD appears bearish. Since I intend to trade within the week and take profit before the week ends, I am considering a short position.
The 30-minute chart provides further support for this bearish outlook. For the past 9 days, price has been forming lower highs beneath a descending trendline, indicating sustained selling pressure. It has also broken below an important horizontal support level, which previously prevented further decline. Following the breakout, EUR/USD remains below this level and is consolidating near its recent low. This suggests that the former support may now act as resistance.
However, because the price has already fallen considerably, selling at the current low may have mean an unfavourable entry. But I can see a retracement toward the broken horizontal level. Since price retests this area, shows bearish rejection and forms another lower high, it could confirm the continuation of the downward movement.
My stop-loss would be placed above the retest high or the nearest significant 30-minute swing high. My profit target would be based on the next support area or the projected size of the previous range. The bearish position would become invalid if price closes firmly above the broken horizontal level and subsequently breaks the descending trendline.
**N.B.: A good bearish setup should have an average 20-day movement, forming a V-like shape on a plane via trendline. Once the market retests the plane and turn resistance, the sell order is imminent. Entry should always be 20 pips beneath the plane **
