The EURUSD has continued its rally as visible in this H4 chart and formed a rising wedge formation. This pair currently trades at the top of its range and the last five candlestick patterns formed either hammers or inverted hammers as the EURUSD tries to form a major top. Friday’s U.S. Non-Farm Payroll report should provide the spark for a major correction.
MACD has formed a negative divergence while it spent the entire rally in bullish territory. RSI has traded from extreme overbought territory and formed a negative divergence as well. A break below extreme territory should accelerate the sell-off.
We recommend adding to existing short positions at 1.3110 while also placing a long hedge at the same level. We do not see any further upside potential to this trade and therefore do not recommend additional shorts. We expect this pair to collapse Friday afternoon starting at 1430 hours CET.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.3200. We do not use stop loss levels and will execute this trade as recommended. Place your take profit level at 1.2900.
