The year-long decline in EUR/USD seen last year bottomed out at 0.9536 on October 28. Since then, it has been on a tear, having rallied to 1.0887 this Wednesday for a recovery of 14.17% in slightly over 2 months. Technically, this counter-trend rally is over-extended.
From Wednesday's high of 1.0887, profit-taking saw EUR/USD pulling back to 1.0782 yesterday before rebounding this afternoon in early London trading. If this market is indeed over-extended, there is a possibility we may see further profit-taking ahead.
The 50% retracement of Wednesday's high and Thursday's low is at 1.0837. At 1.0866, the overnight rebound will hit the 78.6% retracement level. These levels offer decent levels to sell-short EUR/USD in anticipation for a resumption of the pullback from Wednesday's high of 1.0887.
#1 Sold @ 1.08318 - Fri, Jan 20, 12:01pm.
#2 Sell Limit @ 1.0865
Stop @ 1.0910.