Europe's low growth prospects, economic rigidity and potential for significant European Central Bank action all offer fundamental reasons to short EUR. On the flip side, better growth prospects in America, the end of stimulus and potential for higher interest rates earlier are supportive of a higher USD. So, selling EUR/USD is a no-brainer yes?
For months, EUR/USD defied fundamental gravity. Just two weeks ago, the pair hit a level just below 1.4000 - a thirty month high. Many traders have waited patiently for a sell signal. Here's three charts.
First, the big picture:
The close up picture:The hourly chart shows an unusually tight trading range over the last trading week. Firstly, let's put on the table that a sustained break up through 1.3732 would negate the whole set up, outlining a false break and a potential resumption of the uptrend. In my view, a break down through 1.3685 is more likely, and provides another potential sell trigger.
Three pictures, three sells - now, on a break of 1.3675 or a break of 1.3685. Stop loss orders above 1.3732 or the break level. Something for every EUR/USD bear.