the pair is clearly trending lower, and the trade is VERY risky. In a same way we all know that without a risk there is no gain, so what is represented in this trade is good risk/benefit ratio. EUR is in downtrend and many of the players on the market are in this trade for some time. 200 SMA would be the good target for many of them to exit the trade and book some profits, and pair is in oversold level for some time. There is no expectation that pair would completely reverse direction, but 200 SMA on a weekly chart, slow stochastic in oversold level for some time (daily chart) indicate that everybody in this pair is short. It is common in this business that sharp bounce happens when there is no more sellers, because they are already in a trade, and at meaningful barrier many of them start jumping ship (taking profit)
Stops should be placed bellow 200 SMA, and profit targets should start at 9.8000 and 9.8800 should be reached and strong bounce.
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Thanks so much for sharing this chart. I have been doing some of my own research on ECN forex trading and came across this posting. I really don't see the patterns just yet but maybe I will eventually.
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