The past few weeks has been a considerably strong week for the EURUSD due to the the weakening US Dollar. The pairing managed to push to the 1.134 mark which sits on a declining resistance line.We are now expecting a drop from the major currency pairing as the US dollar is expected to slightly rise this week due to the large drop last week.
We are looking to enter into a short position, with the scope of hitting the declining support line which started off as a resistance level. With the price starting to drop off a near term resistance and the RSI setup close to the overbought zone, we should have enough momentum to reach our target. However, once the 200 EMA is reached we will re-evaluate the position to see whether we think the pairing has enough momentum to be able to hit that declining support.
We think a further move up is fairly unlikely at this stage as the RSI is looking overbought and exhausted and the price is close to a resistance line, therefore, no long entrances would be justified at this point in time. However, in forex anything is possible and if the price does decide to continue upwards then it will target the 1.158 mark which is a previous swing high back in August 2015.
For now we are waiting for this daily candlestick to close and form a strong bearish candlestick before entering short.
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