FX.co ★ The EUR/USD technical analysis and trading recommendations for August 3, 2011

4-hour timeframe

Overview:
Forex market analysis for August 3 shows that at the moment the currency is still observing a sell signal with target level 1.4079, the price passed the Ichimoku Cloud, which strengthened the current signal. The formed sell signal is strong and confirmed, since the Chinkou Span fixated below the price graph and the price is below the Ichimoku cloud. At the moment the first target is 1.4081 – the second support level. If this level is passed the second target will be the third support level at 1.3933. Downside movement remains while the price is below the Kijun-sen (1.4300), if the price fixates above this line it is recommended to cut short positions. The Chinkou Span is below the price graph, which confirms the current sell signal and indicates bearish sentiment. The Bollinger bands show continuing downside movement, the lines are diverging and directed down. The MACD is descending, which indicates current downside movement, this filter enables us to trade down now, but after the MACD reverses up the correction should be expected.
Trading recommendations:
Currently it is recommended to trade down with target at 1.4081 and further to 1.3933. Stop Loss should be placed below 1.4300 and stretched down as the Kijun-sen declines. It is recommended to cut short positions after the MACD reverses up.
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 white bars in the indicators window.