Daily Outlook: Risk aversion continues to grow in force as bears gain confidence with each leading economic indicator that tickets south. Once again stocks around the world are dropping as investors discuss possible support levels instead of percent gains. The bearish break of rising trend support from a few days ago (that triggered my short) has technically been powerful: the bears have picked up momentum with the pair falling 100 pips yesterday with little to no correction to the upside. Fundamentals are beginning to lineup with the overall downtrend again and I'm expecting a re-challenge of 1.18 in the coming weeks barring any surprises.
Lots of news today so check the forex calendar for details. Also a notice that 30m candelsticks from the candlestick alert service have been very profitable the past few days.
Trading Idea: Looking for opportunities to sell on rallies. There are three main shorts I would look for and I'll list them in order of most conservative to most aggressive:
The most conservative trade would be to short near falling resistance (top blue line on my chart), which is currently at 1.2370, with short targets down to 1.2200 for 170 pips. I doubt we will see this level tomorrow though if we do I will short.
My primary trade and the middle ground between conservative and aggressive is a short in the 1.2280-1.2300 resistance zone. Short targets from 1.2280 at 1.2250, 1.2230, 1.2200 and 1.2170 for 110 pips profit.
The most aggressive trade would be a short in the vicinity of 1.2220 with confirmation with short targets down to 1.2140 for 80 pips profit.
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