FX.co ★ EUR/USD technical analysis and trading recommendation for August 17, 2010

4-hour timeframe

General picture:
The sale signal with the target at 1.3040 is going on. The target level has been recently attained. The sale signal is strong and confirmed by the Chinkou Span fixation below the price curve and the price fixing below Ishimoku indicator. The price is placed below pivot level defining the next intermediate target of the movement at 1.2642. Also, judging by the position of the lines Tenkan-sen and Kijun-sen, we see that a correction is about to happen. In case of the downward motion refreshment, which will be signaled by MACD down-reversal, the target will be at 1.2642 again. If the price fixates above Kijun-sen (1.2925), the current sale signal will weaken and short positions should be closed. Chinkou Span is below the price curve, this confirms the current sale signal. Bollinger bands is indicating a sideways tendency, the bands are not diverging and directed sideways. MACD is increasing, testifying to the beginning of correctional movement.
Trading recommendations:
Under such conditions, it is advisable to wait for the end of correction, after that bearish trading with the target at 1.2642 can be renewed. Place stop loss above 1.2925.
Besides the technical picture, it is important to consider the fundamental reports and time of their release.
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.