Basic trading idea
Hi, dear traders! In my recent articles, I constantly said that I expect the European currency to fall, and the trend now is bearish. As you can see, the EUR/USD pair is extending its slide. The price has been printing lower highs and lows one by one. At the moment, there is not a single sign of the end of the bearish trend. However, a lot can change during the current week, which we will talk about in this article.
First, please be aware that the information background this week can support both bulls and bears with a fifty-fifty chance. It is impossible to know in advance what the official data on the labor market and unemployment in the US will be. Thus, they may turn out to be weaker than forecasts, which will cause the bears to retreat. The level of 1.0696, in the direction of which the price is moving, is the low of February 14. That is, this level is quite significant and strong. Even if the downtrend around it is not completed, the euro might stall its fall for some time.
Thus, I assume that a rebound from the level of 1.0696 will follow in any case. Further, if the bears do not retreat from the market under the pressure of negative statistics from the US, they may need several attempts to break through this level and push the price down. Thus, around the level of 1.0696 (if the breakdown does not happen at the first attempt), you can take profit on short positions. If it happens, you can keep sell positions with a target of 1.0644. We are closely monitoring key reports in the US this week. The weaker they are, the higher the likelihood that EUR/USD will not fall below the level of 1.0696.
On the 4-hour chart, the instrument consolidated below 1.0765, which now allows it to continue falling towards the level of 1.0644. If the information background this week benefits the US dollar, we may see this target hit in the coming days. The probability will be especially high on Friday, when the US Nonfarm Payrolls are released. There are no emerging divergences - there are no technical reasons to stop the fall on the 4-hour chart.
Alternative scenario
The alternative option for today is a rebound from the level of 1.0696 and further growth towards the resistance zone of 1.0785–1.0801 with full support of the information background. To do this, key reports on the US labor market need to be weaker than market expectations. In this case, the trend will not become bullish, but we can see an upward wave. If the trading signal is formed near the level of 1.0696, then why not earn from this upward move?
Outlook for EUR/USD and trading tips
Today, traders can expect the euro to fall, and a buy or sell signal may be generated near the level of 1.0696, which can be worked out. The direction of this signal will largely depend on the information background. On Tuesday, I advise you to pay attention to reports on inflation in Germany and on open vacancies in the United States.