It may feel like a fade but in reality it’s more of a trend follow and that’s the EUR/USD short sell based on the fresh downtrend on the daily time frame.
Using the five-minute as the set up chart could arguably be micromanaging but there are times that this short-term time frame is perfect. Examples would be specifically entry and exit areas. In this case it’s an entry and one that is triggering on the bullish momentum that we’re seeing the fiber.
I am most interested in the on-going resistance of the daily 34 period EMA low which is currently at 1.3468. This is the entry for traders looking to sell into an exhaustion area (between the 1.3468 level and the 1.3480 minor psychological level).
Watching the five-minute chart gives me an up-close-and-personal view of intraday momentum and the way in which the EUR/USD in trading between the psychological levels. I am also fine with an alternative entry or using this alternative entry as a second short sell and that’s the 1.3450 major psychological level.
Either area valid but the downtrend is new and therefore transitional which means we must be ready for volatility; that doesn’t mean we have to sit through it though. I will use a cheated in stop loss since my “tolerance” for this trade to follow-through to the downside will be low.
The intraday uptrend line and the 1.3450 level are in close proximity and this entry would be one based on bearish momentum rather than the 1.3480 exhaustion-based entry.
The stop loss I will use relies on the bears “owning” the 1.35 handle and I will use a 1.3510 “cheated in” stop loss with a 1.3405 initial profit target. This does make the 1.3450 entry upside-down on my risk/reward but I will be using both levels to enter.
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