Potential Target for the EUR/USD

The EUR/USD has suffered a powerful sell-off from virtually the London through all of NY dropping around 2 cents on the day and only finding support 40pips from the daily low at 1.3358 currently printing 1.3401.

After a few attacks, the Daily Pivot broke and the selling has been consistent since then. We have had a moderate bounce off the M1 pivot but there are several rally points to sell if the Momentum and CCI remain weak.

EUR/USD 30 min Chart

Taking a look at the 30m chart above – we can see the relentless sell-off which did not budge from the Kumo suggesting the support was simply not strong enough to stop the fall. The pair has since been under the Tenkan line for the last 7+ hours and is attempting its first attack on it now. The key points we feel to highlight are;

a) CCI is still incredibly negative with over 23 bars negative and 11 of them greater than -100. The curvature of the divergence back towards the Zero Line is not inward but outward suggesting a redistribution of order flow and likely continuation after some correction

b) Momentum is drastically low and is not ahead of price action suggesting a weak or neutral Momentum model at best.  These moves are generally not sustainable

c) Flat Cloud bottom right at the M2 pivot gives a nice convergence point for selling

With all that being said we are watching the 1.3467 for its confluence of M2 pivot + Kumo Flat Bottom and the 50% fib of the entire downmove from 1.3575 to 1.3360 as a great intraday rally point to consider selling. More patient traders can wait till the highs from today back around 1.3575 with stops just above 1.3600.

Chris Capre is the Founder of Second Skies LLC which specializes in Trading Systems, Private Mentoring and Advisory services. He has worked for one of the largest retail brokers in the FX market (FXCM) and is now the Fund Manager for White Knight Investments (www.whiteknightfxi.com/index.html). For more information about his services or his company, visit www.2ndskies.com.