The EURUSD was able to rally from its support area, visible in light blue in the above H4 chart, and price action is now located a few pips below its resistance area marked in light grey. The Bollinger Band indicator supported the rally and all three bands are sloping to the upside. The EURUSD is trading between the middle band and the upper band. A move into its resistance area is expected to be met by anew wave of short orders.
The current position of price action leaves this currency pair open for profit taking as forex traders are expected to realize floating trading profits after a solid rally. This is likely to result in the exit of existing long positions which will drive the EURUSD lower. A breakdown below the middle band could result in the addition of new net short positions. The risk remains to the downside with limited upside potential from current levels without a fundamental catalyst.
Forex traders are advised to enter short positions at 1.0955 and above in order to be well position for the expected profit taking sell-off in this currency pair and a break in the up-trend. Conservative forex traders should wait for price action to break down below the middle band of its Bollinger Band Indicator which will increase selling pressure. A take profit target of 1.0705 has been selected for a potential trading profit of 250 pips.
Forex traders should protect this trade with a stop loss level at 1.1055 for a potential trading loss of 100 pips which will result in a Risk-Reward (RR) ratio of 2.50.
Short @ 1.0955
TP @ 1.0705
SL @ 1.1055