EURUSD Trade Setup

by: Colibri Trader

Dear traders,

The trading setup from last time did not manage to get enough sellers. Price went down slightly and then there were a few daily rejections. This led to more buyers joining and finally EURUSD went up almost to 1.2100. That was not the best possible trade setup, since it was against the major trend.

EURUSD Trade Setup

The trade setup today is also counter-trend. As you know, I do not like going against the trend. The best setups are with the trend (or at least the ones with the highest probability of success).

Price action is here to show us both continuations and reversals, though. Therefore, I cannot just skip a pattern, when it is on the chart.

Looking at the daily chart is showing us a bullish rejection candle or a pinbar. It has formed just below a major multi-month resistance area. eurusd trade setup

Above is the monthly chart of the EURUSD. As you can see, we are located in an area of resistance. I believe that if we have a correction at this stage it might be minor. The price action of the previous months is showing a lot of bullish enthusiasm.

Coming back to the 4 Hour chart, what we see is more bearishness:

eurusd trade setup

From the 4H chart above, you can see that the failed resistance breakout is carrying more negative connotations.

When the market opens, I will be looking for another bearish confirmation from the 4H chart and make up my mind if this could be a good place to short. I am looking at two levels as potential targets:

1.1850 

1.1700

It really depends on how price reacts to these levels.

Happy Trading,

Colibri Trader

p.s.

Don’t forget to check out my article on Dealing with a Loss. It can certainly help you escape some of the mistakes I have done as a trader and improve in the future.

Also, check out the Trading with Triangles article I wrote recently to learn how you can profit from breakouts.