Forex Technical Analysis – Short the EUR/USD – Bearish Channel

By Russell Glaser – The pair has experienced a bit of a consolidation since reaching a low of 1.2150 last week. As such, the price has climbed close to the bearish channel that has formed on the daily chart, presenting a possible trade setup to go short on the pair.

Friday’s trading had the EUR/USD climbing to a daily high of 1.2450. This daily high was the third contact point for the downward sloping trend line, making it a significant trend line. A parallel line drawn below the price action displays a bearish channel. The long term downward sloping trend line is also displayed, taking into account all the price action for the bearish trend.

A trade setup to go short on the EUR/USD is forming as the price moves closer to the upper boundary of the channel. Going short at a trend line can be one of the best ways to enter into a trending market.

A protective stop can be placed above the resistance level (R1) at 1.2390 and the support level (S1) at 1.2150 can be used as a price target. At the current spot price of 1.2315, this would give roughly a 2:1 profit risk reward.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

FX_Trdr