Euro bulls got pounded today after some headlines suggesting Greece and Germany are at odds on some sort of financial backstop/bailout plan. A report suggested Greece could be headed to the IMF and the euro promptly fell 125 pips.
Technically, yesterday’s prices action put a bearish inverted pattern on the daily chart after a failed upside breakout. It’s a signal we wish we would have heeded.
The technical picture is now bearish although it’s clear that the euro is trading on politics more than technicals. We remain bullish on the euro, having went long at 1.36. We are now right our entry point.
We still very much believe in a euro rebound to at least 1.40. We are, however, going to put a stop at 1.3532. If we get stopped out, we may look to re-enter on a quick spike below 1.35.
t’s the time to stay nimble and maintain nerves of steel. We still have a great deal of conviction on the long side of this trade but if 1.3438 gives way, we may be forced to re-evaluate.