4:45a GMT - First off, yesterday's secondary trade (short at 1.4550) was good for 60 pips before I exited the trade. We are now getting in the range of yesterday's primary signal though, which is to go long in the 1.4400 area. I am a bit less excited about this trade now it has finally arrived however due to a couple facts. So what has changed?
1) It is Friday. A short day and in my experience a bit more of a volatile day.
2) Event risk. We have Eurozone CPI data at 10:00a GMT and US CPI data at 13:30 GMT.
3) Bearish Daily Charts. Daily charts now look like a textbook bearish flag consolidation that just gave us a doji and a shooting star off of the 38.2% fibonacci retracement. In fact, if I was trading off the daily chart I would have shorted that with a stop above 1.4580.
4) After a week of consolidation we are now closer than ever to the rising trend support (bottom blue line on chart below) and trend lines can act like magnets when they are this close
Daily Outlook: So where does that leave us on the day? Well, despite everything above I still think the trade has a reasonable margin of success, and using proper money management I believe it to be worth the risk. Given the concerns I listed above though I will be more conservative than I would otherwise, however, and I will wait for confirmation on the 4-hour charts.
Trading Idea: Primary trade: I am looking for buying opportunities in the 1.4400-1.4380 support zone (50 and 61.8% retracements) with confirmation on the 4-hour charts. I will also look to avoid trading during the news releases mentioned above (more details at forex calendar here). Secondary trade: if no buy signal is given in the support zone mentioned above I will feel much more comfortable going long on the 1.4335 rising trend support (bottom blue line on chart below) as prices in this are will be more ripe for a bullish correction without 4-hour confirmation.