Weak economic reports are bearish for euro
Expected fall in eurozone inflation is bearish for euro. Will the euro continue the decline against the greenback?
On the daily timeframe, EUR/USD has been trading with negative bias after hitting 32-month high two weeks ago.
- The Donchian channel is flat, indicating no trend yet.
- The MACD indicator is above the signal line and the gap is narrowing, which is a bearish signal.
- The Parabolic indicator gives a sell signal.
- The stochastic oscillator is declining though it has not crossed into the oversold zone.
We believe the bearish momentum will continue after the price closes below the lower Donchian boundary at 1.1686, It can be used as an entry point for a pending order to sell. The stop loss can be placed above the last fractal high at 1.1846. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.1846) without reaching the order (1.1686) we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis:
| Position | Sell |
| Sell stop | Below 1.1686 |
| Stop loss | Above 1.1846 |