EUR/USD under technical pressure
|The USD has just ended 5 straight consecutive days of weakness. The DXY, the broad measure of USD relative value, tested and respected daily support stretching back to June last year.
The Euro accounts for approximately 60 % of the weighting in the DXY index, so consequently, the EURUSD did the same but in reverse.
One of the City Trader’s benchmark trading strategies is the ‘Naked Day Trading’ strategy which was inspired by my 20 years of trading in the futures pits in the City of London. I have seen some great setups over the years, but the EURUSD setup today has got to be up there as one of the most pitch-perfect setups I have seen in a while. We have seen a clear price action rejection at a long-term daily resistance level which could see this pair capitulate value back down to our initial profit target at the next strong support zone seen at 1.0550. We will be taking some money off the table around here and then looking for a further move down to 1.03. This trade has a huge risk/reward ratio.
The momentum meter chart below, which shows the relative strength of the top G8 currencies, now shows us a shift in value between these two currencies. This is pure technical trade and should not be traded without a clear understanding of the trading rules and risk management procedure. It is intended for educational purposes only.
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