EURUSD: BEARISH

Current Level: 1.1330

Target: 1.1100

Preference: FALSE BREAK

How We See it Playing Out

The EURUSD broke down through 1.1290 support last week and looked set to test 1.1100 at the very least. Monday’s announcement by the FED that they would begin buying corporate bonds and rolling out more stimulus put an underlying bid tone on the equity markets. But the move on the equity indices, up 0.62% on the day, was pretty crap for such measures.

I think we’ll see a short squeeze back above 1.1330 which should result in all the fresh short positions being stopped out, and then the real move, the break down lower recommence.

I like the False Break trade as the best set up for a low risk, high probability trade. That’s because when it breaks back down all upward momentum will be out of the market and there won’t be anything holding the pair up. If it continues to rally then we’ve lost nothing. So it either works or we don’t get set.

Momentum will come during the North American session so keep a close eye on the equity markets for direction. We need US equities to go down to get this trade-in play!

EURUSD Hourly Chart

False Break Set Up Details

RESULT 

Missed the entry by 1-2 pips. And of course, it then dropped 125 pips!

Brad Gilbert

CEO & Founder of Traders4Traders – Brad has been trading for 28 years and was a former Chief FX Trader for Citibank. Brad trades all markets and all timezones.

Trades: EUR, GBP, AUD, NZD, CAD, JPY, CHF, DOW, SP500, OIL, GOLD

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