FX.co ★ EUR/USD Technical Analysis and Trading Recommendations for September 5, 2011

4-hour Timeframe

General review:
According to the Forex market analysis for September 5, a sell signal is being carried out, and the price is steadily moving downwards. Therefore, short positions are recommended. A Chinkou Span being below a price chart, with the price below the Ichimoku cloud, confirms the strong sell signal. The current target level is the second support level at 1.4075. The downward movement continues as long as the price is below a Kijun-Sen line at 1.4335. In case the price is fixed above the line, the current signal weakens and calls for closing short positions. Currently, the Chinkou Span is below the price chart which supports the current sell signal and reflects bearish intentions of traders. A Bollinger Bands reveals a continuation of the downward movement, and the bands are extending and moving downwards. Therefore, speculating for a fall is more profitable. Falling MACD reflects the current downwards movement, and a filter allows trading for a fall. In case MACD turns upward, it signifies the beginning of a correction and calls for closing short positions.

Trading recommendations:
Given the current euro trading situation, speculation on a fall is recommended, with a target of -1.4075. In case the price breaks this level, the next target is 1.3947. It is recommended to put a stop-loss above 1.4335 and lower it following a decrease of the Kijun-Sen line. In case MACD turns upward, manual close of short positions is recommended.

Besides the technical review please take into account fundamental data and the date of its release.

Annotation to the Chart:
Ichimoku Indicator:
Tenkan-Sen – a red line
Kijun-Sen – a blue line
Senkou Span А – a light-brown dashed line
Senkou Span B – a light-purple dashed line
Chinkou Span – a green line
Bollinger Bands Indicator:
3 yellow lines
MACD Indicator:
A red line and a bars chart with white bars in the indicator’s window