Trade Setups / Chart in Focus:
Today the eur/usd tested the high of Friday’s spike on the QE3 announcement. Since making a new high the pair has fallen 60 pips and is currently trading below the open.
Long term the effects of QE3 will take effect and us dollars will be sold. It seems lots of traders initiated new eur/usd longs on Friday after the Fed’s new QE announcement. Questions you should be asking: Will traders be able to withstand a retracement to the first fib level or a 23.6% retrace? Is this a sell the news type situation catching retail traders on the wrong side yet again?
Currently the eur/usd is simply building a base or consolidating after the last leg up. It looks as if the uptrend can continue. The one thing to be cautious is of is the test of Friday’s spike high has failed so far…
Traders on the street are thinking if you want to buy the eur/usd to wait for your setup, you would be crazy to be buying up here at these levels.
Let’s take a look at the charts.
Bearish reversal forming on the daily..
4 hour looks more orderly and simply consolidating..