Euro slides and unfortunate profit take

Following up to my last post in regards to my technical setup trading plan, unfortunately I was unable to follow through with it. I ended up closing out my trade at barely an 8-pips profit following my technical setup rule.

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EURUSD 4-Hour

As shown in the circled area, it broke through my targeted supply zone and I exited accordingly. Since I was manually monitoring the trade a day ago, I closed it taking a slight profit. Hey, at least it beats a loss!

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EURUSD 4-Hour

It’s also very interesting to note that these to highlighted (in blue) technical levels also held up. This is a very nice example showing how technical levels can be utilized to optimize trade entires and exits as traders work out certain levels to base their rules on.

Fundamentally speaking, the Euro took a tumble as December inflation remained weaker than economists expected.

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EU Inflation

The median estimate for the month of December was 0.3%, which the actual figure falls short of. This poses a dilemma for the European Central Bank with pressures to target the inflation goal to just below 2%. The staggering in December’s inflation gives concern for the ECB’s negative deposit rate and large-scale asset repurchase tactics.

I am currently short the Euro once again as I do not believe this sell-off is over. There is no indication of price being supported by demand. There isn’t a significant demand zone until the 1.05646~ price level.

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EURUSD 4-Hour

Of course, I don’t expect the price to move straight down. Given the sentiment, no doubt this pair will generate quite a few fractals as it trends lower.

With hints that the Feds will begin periodically raising rates throughout 2016, this provides another bearish outlook for this pair. Perhaps the market is more dovish than the Feds with banter that the Feds won’t dare to raise rates again given that labor conditions barely stabilized. By the definition of “barely stabilized”, this comes with the higher than expected December unemployment claims.

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