if we see consolidation at this level [1.3390] a break below would be bearish - yesterday's signal.
I netted good pips off that and currently have another short off of the 1.3400 re-challenge (small position). That position is about 10 pips in the profit with a now tightened stop just above 1.3420.
Daily Outlook: All said and done it was a bearish day yesterday as the pair dropped over 100 pips and never really looked back. Smart money is still trying to figure out exactly how to digest the positive US jobs data from last week coupled with the FOMC minutes from yesterday (where the Fed said interest rates were not tied to any timeline or date). They have two main options: bet on the dollar and its improving economy, OR bet on higher-yielding currencies like the EUR and AUD.
Technically we have been in a strong downtrend since December of ‘09 with a falling trend resistance capping all bullish consolidation patterns. You can see this on the chart below with the falling blue line as the trend resistance.
Trading Idea: I'm bearish on the day and will look for opportunities to sell on rallies. My primary trade will be to short around the 1.3440 resistance area, with bearish targets at 1.3415, 1.3390, 1.3360 and 1.3315. Second, and this has been a very profitable strategy for me the past few months, will be to wait for a pool of consolidation on the 1 or 4-hour charts and then short a break of that consolidation to the downside. 1.3345 might provide such a support level.
Don't forget that Bernanke is speaking around 18:30 GMT, and his speeches can move markets. View more details a the forex calendar here. Also a reminder to everyone old and new to PipHut that the