After an extremely choppy and turmoil week of trading last week, we are starting to see markets settling a bit to give us some swing trade setups. Here we see one on the EUR/USD 4 HR Chart. I’ve highlighted in blue the top resistance area of 1.3740-1.3770 that we bounce off late last week but have come back to retest. As long as this resistance area holds we maintain a longer term bearish view on EUR/USD and will be looking for opportunities to go short and this current level provides a great price to consider a short. The setup would be a short trade in the 1.3700-1.3740 area with a stop loss right above 1.3770 and an initial target of 1.3430 level (shown in green) and perhaps lower if we can break that towards the 1.2800 area. There are 2 great things about this trade, firstly, the attractive risk/reward ratio, currently at about a 5:1 ratio, more importantly this setup provides us a very nice alternative idea if we are stopped out. Clearly the blue area is a major resistance level, which means if it were to be breached and stops us out of this trade, would provide us a great opportunity to go long on EUR/USD with an upside target in the 1.4200 area.
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