FX.co ★ Technical analysis and trading recommendations for EUR/USD for July 22, 2010

4-hour timeframe

Overview:
The ‘buy’ signal with the target at 1.2975 had reached its target and after that it weakened and canceled. A new ‘sell’ signal with the target level of 1.2483 formed. The ‘sell’ signal is strong and confirmed, as the price position against Ishimoku (inside the cloud) testifies to it and Chinkou Span is placed below the price curve. Currently, the price is below the pivot level of 1.2819; therefore, the next target of the downward motion is the first support level of 1.2632. However, on the way of the price to this level there is an obstacle – Senkou Span B, which has not been overcome by the price. Thus, if the price fixes below Ishimoku it is recommended to bear. If recoil from the lower limit of the cloud takes place, a rising correction is possible. If the price fixates above Kijun-sen (1.2890), the current sale signal will weaken and the downward trend is likely to end. Bollinger bands are diverging and down-directed that means the decreasing movement continuation. MACD is lowering, showing the downward correction as well.
Trading recommendations:
For the existing situation, it is recommended to bear with the target at 1.2632. Enter the market with short positions after the price fixation below Ishimoku indicator. Stop loss to set above 1.2890.
Apart from the technical picture, it is important to consider the fundamental reports and time of their release as well.
The chart annotation:
Ishimoku indicator:
Tenkan-sen — red line
Kijun-sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.