Daily Outlook: The pair continues to consolidate in a very tight bearish wedge (see bearish triangle on chart below). The thing I like about tightening consolidation patterns is that a break usually produces a good strong move that traders can net good pips off of. Ultimately I'm bearish on the pair, but in the next 3-5 days I think we'll see a return to 1.3500 area before seeing a strong return to the downside.
Also, no shortage of news tomorrow with US initial jobless claims, home sales, inflation reports, German manufacturing etc. so tread carefully. See all the news events at the forex calendar, and as always watch the candlesticks.
Trading Idea: Lots of different trading setups within this wedge. First I will be looking for a shorting opp near the top of the wedge (currently 1.3430 but falling) with targets at 1.3400, 1.3370 and 1.3340 (for 90 pips). I will also look for a long near the rising trend support of the March 25th and April 8th lows, currently at 1.3300 with long targets at 1.3330, 1.3355, 1.3380 and 1.3420 (for 120 pips profit). Another aggressive trade will be a long on a sustained break of the immediate falling resistance (connect April 15th and April 20th highs) at 1.3450 with long targets at 1.3475, 1.3500 and 1.3580 (80 pips profit).
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