EUR/USD: A High-Probability Short Setup at 1.1829

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At its core, this trade is driven by a powerful and growing divergence between the US and European economies. While technicals tell us where to trade, fundamentals tell us why we're trading.

1️⃣ The Interest Rate Gap: The U.S. currently offers significantly higher interest rates (4.25% - 4.50%) compared to the Eurozone (2.15%). This makes holding the US Dollar more attractive, creating natural downward pressure on the EUR/USD.

2️⃣ Central Bank Policy: The US Federal Reserve remains hawkish, focused on strength and fighting inflation. Meanwhile, the European Central Bank is dovish, signaling a willingness to keep conditions loose to support a weaker economy.

3️⃣ Labor Market Strength: The US enjoys a robust labor market with unemployment at just 4.1%, while the Eurozone's is significantly higher at 6.3%. This points to a stronger US economy.

In simple terms, the US economy is strong, and its central bank is acting like it. The Eurozone economy is weaker, and its central bank is acting accordingly. This fundamental imbalance is the fuel for a potential significant move down in EUR/USD.


The Technical Picture: The Wall at 1.1829

As you can see on the 4H chart, the price has run into a major wall of resistance at the 52-week high of 1.1829. After a long uptrend, the momentum has stalled, and the price is now consolidating inside a symmetrical triangle. This coiling of price action often precedes a strong breakout.

Our strategy is not to guess the breakout, but to act on a high-probability retest of resistance. We are looking to enter a short position as the price pulls back towards the upper boundary of this triangle, anticipating a failure at resistance and a subsequent break to the downside.

The Actionable Trade Plan

This setup offers an excellent risk/reward profile.

📉 Asset: EUR/USD
👉 Entry (Limit Sell): 1.1780
⛔️ Stop Loss: 1.1850
🎯 Take Profit: 1.1600
📈 Risk/Reward Ratio: ~2.57:1

Trade safe and manage your risk.

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