EUR/USD Technical Analysis: Bearish Momentum with 2.04R ShortEUR/USD Technical Analysis: Bearish Momentum with 2.04R Short Opportunity
Current Market Structure
The EUR/USD is displaying a clear bearish trend across multiple timeframes, with price action showing lower highs and lower lows since late 2024. Analysis of the charts reveals:
Daily timeframe: Sustained downtrend since October 2024, with price currently testing resistance near 1.0380
4-hour timeframe: "Confirmed" bearish alignment with both the 8 EMA and 21 EMA positioned below the 55 EMA
1-hour timeframe: Similar bearish configuration, reinforcing the short bias
EMA System Confirmation
The proprietary EMA System Status indicator demonstrates strong bearish conviction:
240 Signal: Bearish
240 Trend: Bearish
Alignment: Confirmed
This triple confirmation suggests high-probability conditions for short entries.
Key Technical Levels
Support Levels:
1.0300: Psychological round number
1.0230: Recent swing low and profit target
1.0200: Major psychological support
Resistance Levels:
1.0400: Key resistance zone with 200 EMA confluence
1.0430: Stop placement zone above recent swing high
1.0500: Major psychological resistance
Correlation Analysis
Supporting the bearish thesis, the DXY (Dollar Index) shows a complementary bullish structure with:
Confirmed bullish alignment on the 4-hour timeframe
Recent break above the 107.00 resistance level
Bullish momentum in MACD
This inverse correlation adds significant weight to the EUR/USD short setup.
Trade Parameters
Entry Strategy:
Short at 1.03632
Stop Loss at 1.04287 (65.5 pips)
Profit Target at 1.02296 (133.6 pips)
Risk/Reward Ratio: 2.04
Risk Management:
1% account risk allocation
0.5 lot position size
$500 risk per trade (on $50,000 account)
Potential profit: $1,019.85
Technical Confluence Factors
Several factors align to support this trade setup:
Price rejecting at 55 EMA resistance on multiple timeframes
MACD showing bearish momentum and alignment
Weekly and daily session boundaries reinforcing resistance zones
Recent higher timeframe rejection of the 200 EMA
Market Timing Considerations
The European and US economic calendars should be monitored for:
ECB monetary policy statements
Federal Reserve commentary
US dollar-impacting economic data releases
Conclusion
The EUR/USD presents a high-probability short opportunity with a favorable risk-reward ratio of 2.04. All key technical indicators align bearishly across multiple timeframes, with strong correlation confirmation from the DXY. This setup fits the criteria for a "Confirmed" signal within our trading system, meeting our standards for trade execution.
Trade management will follow our established protocol with potential scaling out at interim support levels and trailing stops implemented once price moves beyond the 1:1 risk-reward ratio point.
