EURUSD

I agree there may be bit too many trendlines on this chart  but lets try to make sense of them all.

On a monthly chart (not in this chart), Euro is at the top end of what looks like a falling wedge. Falling wedges are generally bullish but at this point i am inclined to play the downside targeting the bottom downtrendline of the wedge.

On a weekly chart, it is within a symmetrical triangle. While such triangles simply mean consolidation, we can play to the downside here as well, expecting Euro to hit the bottom of the triangle. We also have 3 weekly doji candles and Stochastics has rolled over which is bearish.

Finally, on a daily chart Euro made or is making a small Head & Shoulders reversal pattern. A) If i draw a downtrendline from left shoulder low to right shoulder low, then the neckline has not been broken yet. B) But if i draw a straight line, then neckline is broken. So, we have a question mark here.  Assuming option B, our target will be 160 pips to 1.3410 area which is where Fib retracement level is (blue line). I assume option B because sometimes one can go ahead without waiting for neckline to be broken if other signs indicate that price is ready to move down. In this case, I am talking about a broken uptrendline from Jan18th and Eur closed beneath it making lower low in the process. Finally, price is trending down within falling wedg.

Based on all these observations, we have 2 scenarios as you can see on the chart. I guess the third option would be straight down to the uptrendline.



 Trade:

Sold at 1.3560 and 1.3528. Stop is 1.3660. Target: 1.3410. 

Negatives:

Risk-reward is not fantastic and interest rate differential is Euro positive by slightly over 70bps. I will post a chart later which shows why interest rates play a very important role in FX world.