During the previous week, we have watched the EUR/USD roll-over from a high of 1.3785 to a lower low of 1.3198. This move has taken out an important swing low near the 1.3445 area and has sustained prices below this level ever since. This price action confirms a change in the larger time-frame trend. From this point forward, we will look to identify swing high resistance levels and short this pair until the trend and/or momentum changes. Of course in order to reach resistances worth shorting, the EUR/USD will have to bounce. We will not attempt to buy these bounces. Experience has taught that it is much better to wait for a good resistance level and trade with the overall trend on larger time-frames. This week, the levels we will be watching for are the 1.3350 area resistance and the 1.3400 – 1.3430 area resistance. If price bounces beyond these levels with ease, then we will have to re-evaluate once again. Until that condition is met, we will remain bearish and anticipate price behavior changes at these predefined levels, measure our risk, and attempt to establish short positions.
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