Daily Outlook: Price action continued to bounce off of rising trend support yesterday, producing two bounces: first one at 07:00. We held off at first after the very bearish move, but the next candle saw a lot of buying and turned into a strong bullish candlestick (and actually managed to close above support). That bounce was up to 80 pips. The next touch came at 16:00 and, while not kicking up any great buy signals, did produce another 55 pip bounce.
Then two very important events occured: 1) the 61.8% retracement from the Nov 4 - Jan 9 drop held despite several hours of repeated attempts to break above it, and 2) the pair limped through the bottom support, which caused us to take a short position anticipating more losses. Our stop is above the 61.8% retracement and another rise above there will cause us to stop-and-reverse for another long.
Trading Idea: Primary trade is a short around current levels ~1.3710 (for reasons outlined above) with targets at 1.3685, 3655, 3625 and 3600 for 110 pips profit.
If we do see a sustained rise above the 61.8 fib (~3750) then we will stop-and-reverse with long targets up to 3800 and above.
Enjoy your weekend everyone!