Having been stopped out of the earlier short (never initiate a trade in Monday morning Asian trade – duh!) this second attempt is better supported technically.
EURUSD has formed and validated a shooting star (or pin-bar) formation on the hourly and is in the process of completing one on the 4 hourly. It reversed almost exactly at the confluence of the 200 hr MA, the 55 day MA and the 61.8 Fibo of the recent swing down from 1.3432 – 1.3145. Last week’s close was below the neckline of the H&S top, which was at 1.3280. Today’s move is the classic re-test of the broken support (or as I find it easier to remember it, the dog coming back to sniff it’s poo). Also supporting this trade is the DXY – the DXY is in a bullish Trendline break and seems to be aiming for highs not seen since August last year. Some of this dollar bullishness is accounted for by the rise in USDJPY, but the Euro makes up 53% of the DXY, so a strong DXY means a weak Euro.
With all these technical factors lined up it is a reasonable probability that the Euro should go down. I am short $200/pip EURUSD @ 1.3283. If the price goes near 1.3340 I would definitely get out – going above 1.3310 would make me nervous!