EURUSD consolidated last week inside of the large Brexit candle. As you can see the on the chart the last swing up is in the form of a choppy price action that climbs slowly, confirming that this is just a retracement and the best strategy is to sell the pair. Looking at the daily chart, one good place to do so would be near the lower border of the long-term channel that was broken after the Brexit vote. Now the market is on the other side and it’s moving closer to retest the channel. Selling on reversal signals on such retests of old support is usually a highly reliable strategy to profit from the FX market.
If price returns inside of the large channel that would invalidate our bearish view for the pair.
We may find more price levels and signals to sell on the lower timeframes.
Here on the 4-hour chart, you can see where the pivot points for this week and this month are. The price is at the monthly pivot point at the moment, if it breaks it slightly higher at 1.1213 is the weekly resistance 1 which is 20 pips away from the lower border of the broken channel. So this area between 1.1210 to 1.1240 would be an ideal place to sell EURUSD. The main question is will the market reach this area? The plunge down was very fast so the market may continue the downtrend sooner rather than later. That’s why we need to watch closely for any reversal patterns and not miss any opportunity to short the pair.
On this chart, we can better see how the middle monthly pivot point held as resistance 3 times. This indicates strong resistance and you can sell here with a stop above the highs. If it breaks higher then it’s highly likely that the 1.1210 – 1.1240 resistance area will be reached, and that would be the next selling level.
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I've been a professional trader for over 5 years.
Currently I work as forex analyst for different investment companies.
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