The Euro has been trending higher against the US Dollar along with an overall resurgence in risk appetite since putting in a double bottom in early March. Prices now look to have established a medium-term top, putting in a Dark Cloud Cover bearish reversal candlestick formation and following through with a close below support at the lower boundary of a rising channel that has guided price action higher since late April.
We will enter short from here, initially targeting the previous swing bottom below 1.30. Importantly, this will be a “soft” target, meaning we will look for this to be the next important juncture but refrain from setting a firm take-profit order at this level, looking for the pair to sink substantially lower to break below the double bottom at 1.2454. A stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340 (Ilya Spivak, currency analyst).