Trade #10: EUR/USD Short

I am creating an entry order to short the EUR/USD @ 1.5350, stop @ 1.5400. My target is 1.5100-50. I last posted about the EUR/USD here.

The daily chart above shows that the rally for Waveb was shallower than I expected. It is, however, in a clear 3-wave pattern which indicates it was a countertrend rally. I am now anticipating that Wavec will extend below the Wavea low.

Retail traders are net long and adding to long positions. This supports a break below 1.5283 (Wavea low). However, longer term, COT data shows commercial traders taking multi-month record long positions, which is bullish. If price breaks below 1.5283 and then bounces back, I will then look to go long.

The 4-hr chart shows an enlarged view of the Waveb upward correction. It appears to have taken the shape of a 3-3-5 flat. My strategy is to take a short trade on a break of the supporting trendline and the 38.2% fibo around 1.5365. My stop will be above this level.

My target is 1.5100-50 as there is some strong support in this range. Wavec would equal Wavea @ 1.5108. The channel trendline, which is nearing that range, lies at 1.5153 today. Also, the 50% fibo is at 1.5163. I the trade goes my way, I will look to tighten my stop or close my position in this price region.

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