Sell-side on EURUSD: A Swing Trade Idea

Forex

Summary:

Despite the Jitters the FOMC has given to the dollar, EU is likely headed south as the Fed continues to fuel its intent on curbing inflation.

SELL EURUSD

Close Time

CLOSED

1.06005

Entry Price

1.05191

1.06536

1.16391 -0.00035 -0.03%

81.4

Pips

Profit

1.05191

1.05187

Exit Price

1.06005

Entry Price

1.06536

Fundamentals

On Wednesday, January 4, 2023, the US Dollar index has seemingly caught the short-end side of the stick as it traded -0.18% lower from its daily high after the release of the FOMC. The short stutter of the dollar may be fueled by the Fed’s intent to slower down its pace of raising rates after seeing modest growth on the economy—even conducting overnight repurchase agreement and reinvestment activities to further support the economies rebound.

However, this does not change their stance on the US Economy’s inflation level—as it continues to dance above what is wanted. The team believes that the undertone of EURUSD would still be carried by the strength of the dollar as the Fed has decided to increase Federal Funds Rate of 4.25% to 4.50%--inciting a .25% basis point hike; which has been the general go-to of the Fed at the span of 2022.

Technicals

Monthly

The monthly chart has seem to find sell-side pressure on the resistance area price is currently hovering to. With the latter being previously retested on May 2022—and proceeded with a 1,235 pip move downward. As we approach the same area again this month, we are locking in on a possible bearish impulse the market may provide.

Weekly

The Weekly chart is seen to be in a decisional as price is currently hovering above the 50MA while still trading below the 100MA. To interpret this clearer, market may be in a short-term buy trend—but will still provide strong bearish responses as it continues to loom below the 100MA. However, at this case, a short may be a more probable play as price is currently dealing with a monthly and weekly resistance—further supporting a possible sell-side play.

Sell-side on EURUSD: A Swing Trade Idea_1

Daily

Zooming into the Daily Timeframe, price has seem to found a resistance area along the daily 50% Fibonacci Retracement Area, however, we would advise to proceed with caution as there would be a possibility that price may continue to push upward for a retest of the latest resistance area that it tapped or find sell-side pressure along the 61.8% retracement level or 1.06452.

On our entry timeframe, we are taking a speculative short expecting that price will be kept from pushing further up as the 50MA and 100MA is in perfect confluence with the 50% Fibonacci Retracement level and an H4 Resistance. As our take profit objective, we are setting the recent low of 1.05191 as our TP Level and the SL at 1.06536—to keep our position safe from stop hunts. If ever price hits our Stop loss, there is a high probability that price may want to trade higher.

Sell-side on EURUSD: A Swing Trade Idea_2

TRADING RECOMMENDATIONS

Direction: Sell/Short

ENTRY – 1.06005

TP – 1.05191

SL – 1.06536

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