EURUSD has been trending lower and has recently made another strong break below support at the 1.2800 major psychological level. 

Price dipped to the 1.2700 mark before making a quick bounce and starting a potential retracement.

Using the Fibonacci tool on the latest swing high and low on the 1-hour time frame shows that the 50% Fib level lines up with the 1.2800 handle, which might serve as resistance. A higher pullback could reach until the 61.8% Fib level, which lines up with a broken support area and the 100 simple moving average.

Stochastic is almost in the overbought zone, indicating that sellers could push prices down again soon. MACD, on the other hand, is still reflecting the presence of strong buying momentum.

Shorting at the 50% or 61.8% Fibonacci retracement levels with a stop above the 200 SMA line in the sand could yield a high return on risk for a swing trade, if one aims for new lows. Trailing the stop could be a good way to minimize exposure and lock in profits along the way.

By Kate Curtis from Trader’s Way