FX.co ★ The EUR/USD technical analysis and trading recommendations for December 17, 2010

4-hour timeframe

Overview:
The correction against the sell signal started. The sell signal has the target level of 1.2966. This signal is weak and not confirmed, as the Chinkou Span is still above the price chart and the price managed to fix inside the Ichimoku Cloud. Until the current signal strengthens, it is not recommended to trade down. In case the price fixates below the Ichimoku cloud the first target for downside movement will be the first support level of 1.3118. In case the first resistance level is passed the next target will be the second support level of 1.3012. The downtrend is presented until the price remains below the Kijun-Sen (1.3335). In case the price strengthens above this line, then short positions should be closed. The Chinkou Span is above the price curve thus denoting the bullish sentiment (for the moment). The Bollinger Bands show the change in movement’s direction, the lines are not diverging and directed sideways. The MACD is ascending, thus pointing to the current correction.

Trading recommendations:
Currently it is recommended to trade down with the target to 1.3118. Stop Loss is placed above 1.3335. We enter the market only after the price fixates below the Ichimoku cloud and the MACD reverses down.

In addition to technical image, one should take into account the fundamental data and the time of their release.

The chart annotation:
Ichimoku indicator:
Tenkan-sen — red line
Kijun-Sen — blue line
Senkou Span A — light brown stipple line
Senkou Span B — light purple stipple line
Chinkou Span — green line
Bollinger Bands indicator:
3 yellow lines
MACD indicator:
The red line and the histogram with the white bars in the indicators window.