I just landed a couple hours ago after this weekend's Traders Expo in Ft. Lauderdale. It's always great to meet readers in person, and to see how far and fast online trading, and especially Forex, have really come. Now back to business. We must carry our EUR/USD short bias forward while below the May range support level 1.2690. The next obstacle this newly formed downtrend must overcome is the September 2005 highs of 1.2589. A push below this and the momentum could really start building after the massive bearish butterfly pattern successfully defended 1.3000.

Should we get through 1.2589, we have a pair of Fib levels standing by to offer short-term support at 1.2520. We can play this one of two ways. First, we could be stop-entry sellers below 1.2580 with stops 30 points away targeting 1.2520. Or, you could wait for 1.2589 to give it up, and wait for a retracement back towards 1.2589 to short after a 1.2560-70 low. You can get away with stops being a bit closer here, because you are pinpointing your entry.

Either way, use stops and look to at least take partial profits into 1.2520.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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