25 July 2016 at 7:11 GMT
Alan Collins from 3cAnalysis.com takes a look at EURUSD and explains why he is going short into this week and looking to sell any short-term rallies.
Collins has three main reasons:
1. Last week's decline through 1.1000 was the thirrd down week in a row and the fouth in the last five weeks.
2. Although the market stalled close to a 62% correction to the December–May rise, like in June, the mid-point of an increasingly negative Keltner channel has capped rallies.
3. The key 13-day moving average has also been capping rallies ever since the post-Brexit vote drove EURUSD to a June 4 month low.
The decline is gradual rather than explosive, and Collins expects that scenario to continue.
Profit-taking rallies are likely to find sellers near the 13-day moving average, currently 1.1049.
On the downside, the target is June’s 1.0910 low, then 1.0825, which is February’s bottom or even 1.0782 a broader 76% correction point.
Only a rate above 1.1168 would prove this view incorrect and show that sentiment has turned positive.