EURUSD - SELL LIMIT - 25th January 2021




EURUSD - SELL LIMIT - 25th January 2021 (Closed)


Good evening team!

Very good start to the week, hopefully plenty more to come! Although I closed down the EURUSD to secure some profit, I am still looking to trade the pair lower. As you know, the FED interest rate decision and press conference is early hours Thursday morning. Markets are expecting an indication of a rate hike in March leading to further rate hikes later in the year, along with an announcement of plans to reduce the FED’s balance sheet. This only favours a DXY rally into the announcement at least. Furthermore, tensions across the Middle East and the EU are rising. President Joe Biden has met with a number of EU leaders about the Ukraine and Russia tensions, he has put 8500 troops on “heightened” alert and are ready to be sent to the region due to the possibility of a Russian invasion. Who knows if this is just FUD. But also in the Middle East there has been a number of air strike attacks in Abu Dhabi over night and the Yemen Rebels are threatening more. The UAE are allies with the US, and I guess you can put Yemen and Iran in the Russia camp. Again, who knows if this will lead to anything. However all of the above favours a stronger USD due to the risk-off market sentiment and safe haven appeal.

DXY 4 Hour Chart

There has been a clear rally back inside the rising channel structure for the DXY. Investors are most likely moving into the Dollar in anticipation of a rate hike announcement. The 95.53 support most hold.

EURUSD 4 Hour Chart

Firstly, we can count a clear 3 wave rally to the wave 4 top at 1.1481. This is our bearish invalidation level, any move above that will invalidate our bearish sentiment. Over the past couple of weeks the structure has been difficult to understand due to the choppy nature. However, there has been a clear five wave decline to complete the first wave 1 of a bearish move. We are now expecting a corrective rally into the 61% FIB zone before another steep decline. We will use this level as our first entry point into the market. There is a chance of a clean breakdown from here, if this occurs we will look to enter the market tomorrow.

Trade Setup: SELL LIMIT – entry price 1.1360, stop loss 1.1445 and take profit 1.1000. 

Stop loss: 85 pips

Take profit: 360 pips

We will look to build on this one, my focus this week is to ensure we pick up some profit on this pair!

Trade Setup
SELL LIMIT

Entry
1.1360

Take Profit
1.1000

Stop Loss
1.1445