18 Jan EUR USD Analysis – Is It Safe To Short This Rally?
EUR:USD closes today’s session at resistance and I’m sure many will be looking to this level as an opportunity to add to shorts or to enter short.
Although my opinion remains that a long term low is not in, more so with €1 Trillion LRTO hanging over it, I definitely don’t feel comfortable selling the current resistance, but I wouldn’t buy it either. In fact, I entered long yesterday and covered the position at the 1.2860 resistance today. The trade was based on my intraday system which triggered long and still remains long for the time being.
So what’s different about this retrace to all of the previous ones?
Well the main reason is the hourly 200 MA that has offered support for the very first time since the whole sell off started back in October. As you’ll already know by now, I’m generally bullish above the 200 MA and bearish below it, and when it offers support on a retrace as it did yesterday I become a buyer.
I closed the long because that is the sensible thing to do when in a trade that is not only counter trend, but also at major resistance. However, if we see a sell off that finds support on or above the 200 MA then I will look to buy on the basis that a 3rd run up to 1.2860 resistance will break through after which I would be targeting the 1.3000 area.
Of course, price could be well above this resistance by morning, or, it could have sold off and be well below it, we just don’t know for sure which is why it’s safer to stay flat at this moment in time, but if the factors detailed in this post show signs of playing out then we could have a nice long entry on our hands.
Here’s the current hourly chart, and note that this level is also major resistance on the daily chart, so don’t take risks on the long side unless you are confident in what you’re trying to achieve:
If I decide to take a swing position on this pair I’ll update the comments below this post and detail the trade in the trades log to the right of this post.