EUR/USD begins trading during the New York session right around the same levels it traded before yesterday’s FOMC decision and press conference. The volatility that took place yesterday squeezed out many euro short positions with price surging all the way towards 1.1040. My colleague Joseph Trevisani shared this great post - http://bit.ly/195uIA4 that explains what happened to the euro at the close of the New York Session.
Currently price action on the 240-minute EUR/USD chart shows that the recent rally is respecting the trendline off the 12-year low. Volatility may remain elevated, but the bearish trend is poised to continue on any clean break of this technical region.
If we do see price consolidate over the next couple of weeks, the 50-day SMA, which is trading around 1.1250, will serve as critical resistance. Key support will come from the 1.0450 – 1.05 zone. Eventually, my downside targets will target a drop towards the 1.0250 level, followed by 1.0050.
The trade: Sell EUR/USD 1.0700, with a stop loss at 1.0750 and take profit at 1.0550. The risk/reward ratio is 1:3
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading