As you can see from the chart above, there is some good support at the green horizontal line where Eur Usd has been consolidating for the last few days. This is a historical support resistance and I think it is likely that we get a bounce fromt his level. Another reason to support this is the fact that the RSI has made a double bottom while the price has made a lower low (which means it is a positive divergence). To clear the oversold correction , Eur Usd could bounce as high as 1.40 which would also be a test of the descending trendline which started when this pair begain the decline in Dec 09.

If we take a look on the weekly chart (which is good to do every now and then), it seems pretty clear to me that the trend of Eur Usd is down. The target is the ascending trendline on the above chart which is a level of about 1.3100. As long as Eur Usd stays under 1.4200 there is no danger for upside in my opinion.

The fact that I believe that Eur Usd is still in downtrend for the next few weeks or months leads me to make the decision to only short rallies and not try to go long to catch the bounce.

Strategy

Short 1.3900 until 1.4100 with a stop above 1.4250.