EUR/USD Technical Strategy: SHORT AT 1.2407
- Five-day Euro upswing seems to be corrective within a larger down move
- Shooting Star candle at former support, 4-hour reversal hint swing top set
- Reactivated EUR/USD short trade aims for support test below 1.24 mark
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The Euro has managed a five-day winning streak against the US Dollar but gains may prove to be corrective, giving way to downward resumption. Tellingly, prices put in a Shooting Star candle on a retest of former trend line support, hinting at indecision and warning that a reversal may be around the corner.
Zooming in to a four-hour chart (see below), a break of the near-term series of higher highs and lows seems to suggest that the upswing from March lows has lost momentum. Negative RSI divergence bolsters the case for the formation of a swing top and an on-coming downturn.
Last week's order to short EUR/USD at 1.2277 was filled but the position was subsequently stopped out on a daily close above 1.2329. Bearing in mind the current setup, the trade has been re-established at 1.2407 . It initially targets 1.2350 and carries a stop-loss to be activated on a daily close above 1.2445.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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