Yesterday our economic calendar was sparse with literally no market movers for the better part of the London and NY trading sessions. What caused a temporary appreciation for Euro was news from anonymous sources that despite the likelihood that King Mario will not talk about anything monetary in Jackson Hole, there is a possibility that QE in Europe will be unwound. That probability of a long term policy shift should be enough to trigger a USD demise and Euro bull frenzy. At the moment from the chart, the Euro is at a ceiling and any positive news will cause a strong break above resistance towards 1.3. Other than that, there was nothing much, price action was modest moving strictly within previous support-resistance zones.
The weekly chart in particular is important. As we can see, price action is testing the 200 period moving average with stochastics deep in the overbought territory. I’m only looking for sells in the 4HR chart and entry will be immediate with stop losses above this week’s high. Already there is a sell signal with price trending lower in the 4HR chart and therefore, I will trade as follows:
Stop Loss: 1.1820
Take Profit: 1.550
Today watch out for German ZEW Economic Sentiment in the London Session. Sentiment is projected to be low at 15.0 down from 17.5 recorded in July.
Have a good trading day.