EUR/USD Trading Opinion: Eliminate the Rally Strategy
The EUR/USD futures market is showing continued bearish pressure as it trades close 1.03305like this EURUSD analysis shows, with key resistance levels above and bearish momentum reflected in the long-term performance. This creates an opportunity for any rally that may be in major resistance areas for a short trade. Below is a detailed trading setup with entry targets, stop loss, and profit.
Trading Position: Cut the Rally
- Entry price: 1.03800 (close to the Low Value Area on January 7)
- Stop Loss: 1.04180 (just above the VWAP on January 7th and the next important resistance level)
- Profit targets:
- First target: 1.03150 (Low Value Area on January 3rd)
- Final goal: 1.02835 (Checkpoint from January 1)
Philosophy of Commerce
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Main levels of resistance above:
The range between 1.03800-1.04180 It is an important protected area because:- The Low Value Range (VAL) on January 7 at 1.03800which is consistent with historical volume and liquidity concentrations.
- The VWAP on January 7 at 1.04180marking the upper limit of the protection zone.
A rally into this area is likely to attract sellers, making it a favorable entry point for a short position.
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Bearish Momentum:
The inability of the Euro to close above the 20 EMA on multiple attempts reinforces the bearish trend. Any rally into the defensive zone is expected to be corrective, not a reversal. -
Risk Reduction through Partial Gains:
Participating profits at 1.03150 allowing traders to mitigate risk while targeting the next major support level at 1.02835 for the rest of the situation. This approach balances short-term gains with greater mobility. -
Dynamic stop adjustment:
As soon as the price reaches the first profit target (1.03150), move the stop loss to the entry price (1.03800) to eliminate risk and secure profits.
Execution Plan
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Watch price action near 1.03800:
Wait for the price to go towards 1.03800ensuring that he struggles to break through the defensive zone. Signs of hesitancy or a decline in a bullish trend (eg, a lower Delta or high sell volume) will confirm the entry. -
Enter short at 1.03800:
Start a short position at or near this level, ensuring a stop loss at 1.04180 to account for potential instability. -
Take a share of profit at 1.03150:
Close 50% of the position at 1.03150 to lock in profits as the price reaches the first major support. -
Final profit target at 1.02835:
Hold the remaining position to move more to 1.02835main liquidity area and historical POC. -
Adjust stop loss:
Once the first target is hit, move the stop loss to the entry price (1.03800) to secure risk-free trading.
Risk-Reward Analysis
- Risk: ~38 pips (from 1.03800 to 1.04180)
- Reward (Target 1): ~65 pips (from 1.03800 to 1.03150)
- Reward (Target 2): ~115 pips (from 1.03800 to 1.02835)
This is a favorable result risk-to-reward ratio from 1:1.7 for the first target and 1:3 for the ultimate goal.
This trading idea is for educational purposes and if you trade, it is always at your own risk. Fading there is a trend in trade a contrarian strategy where you sell into rising prices and buy into falling prices, essentially guaranteeing that the current trend is going to reverse. You anticipate that the market has overreacted and is due for a correction, allowing you to profit from the pullback, even a temporary one (part of the reason we take partial profits on the way!).
However, this strategy is not without risk as the trend could continue, leading to losses.
This view accelerates the bearish trend in EUR/USD by fading any rally into the 1.03800-1.04180 zone of struggle. By using a systematic approach with clear profit targets and dynamic changes to stop losses, traders can effectively manage risk while taking advantage of the bearish trend of the Euro.
Trade at your own risk, and make sure the position size is correct to maintain control and consistency in performance.Visit ForexLive.com for additional views.
