5:38a GMT - The problem with trend reversal signals is that technically when you back out to a larger timeframe any reversal just looks like a minor correction in the overall trend. We have a similiar situation today with the EUR/USD as it approaches its daily trend support. You can see just the edge of it in the below chart (the thick blue light at the bottom right) currently at about 1.4725. The only real way to confirm a trend reversal is with fundamentals, and we have had the same mixed fundamental picture for awhile now. As the US economy gets better and interest rates are at an all time low the greenback has suffered against higher-yielding currencies as risk-appetite increased. For USD strength we either need bad US economic news or very bad Eurozone news (to show that the world economy is still struggling). Without changing fundamentals we are probably just seeing a price correction and some profit taking. Well yesterday we did get some bad news as US consumer confidence unexpectedly dropped below 50% (a slight increase had been forcasted) and home price index continued to contract. Today we have Germany's consumer report and that could give us some direction in the EUR/USD short-term.

But since the short term 60M trend is down I will continue to look to sell rallies at resistance but I will set my target at that thick blue daily support as I expect congestion there.

Trading Idea: looking to sell a rally below the 1.4870 resistance area with short targets at 1.4835, 1.4800 and 1.4770. If 1.4870 is broken without signal look for a challenge of 1.4925.

(click to enlarge)

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Forex Signals - EUR/USD Big Day Ahead is a post from: PipHut.com