EUR/USD: A Shorting Opportunity
InstaForex Group | Oct 18, 2021 04:42AM ET
The EUR/USD pair completed correcting near 1.1624 before rebounding. After that, it traded sideways, in the 1.1580 /1.1624 range. The resistance level is the high of Oct. 4. So, the volume of long positions has decreased near this level.
The RSI indicator approached the overbought zone on the 4-hour chart. Yet, it did not touch the 70 line. At the time of writing, the indicator passed below the level of 50. It could indicate a possible change in the trend.
As per Fibonacci retracement levels, the 1.1624 level coincides with the 23.6 level, and that is where the pair completed correcting. This movement indicates bullish sentiment building as the volume of long positions drops.
On the daily chart, the pair is trending downwards. Notably, the correction lasted from Oct. 13 to Oct. 15 as a result.
The pair is likely to stay flat in the range of 1.1580/1.1624 for a while. The accumulation phase has just started. As a result, this may lead to stronger momentum in the market.
So, we recommend sticking to the breakout strategy. Open long positions if the price consolidates above 1.1640. On the other hand, it is better to open short trades if the price fixes below 1.1565.
Complex indicator analysis gives a short signal based on the short-term and intraday charts due to the sideways movement along the lower boundary.
Technical analysis indicators signal a downward movement and an opportunity to open short positions in the medium term.
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