I described this strategy and what to look for yesterday: One of my most profitable strategies in the past couple weeks has been to sell sustained breaks of resistance. The essence of that strategy is to wait for the pair to consolidate above a support level, then to sell a sustained break of that level. I will be on the lookout for the ‘pool' of consolidation throughout the day and then followed up with this is in the comments section a few hours later: It looks like 1.3400 will give us the support/consolidation we need. It needs to develop more but if we continue to see consolidation above this level a break below could trigger a sell.
Daily Outlook: So far this week the pair has been bearish, bearish and more bearish (sounds like a law firm ;) and I see no reason to start buying now. Since March 17th the pair has dropped over 500 pips, smashing through supports and we've been selling all the way down. The major threat to the trade at the moment is that since the pair has dropped so much recently with little to no correction it could be a bit oversold. Couple that with the bullish hammer that occurred on the 4h chartsat 20:00 gmt and I will to continue my same strategy that has produce great profits so far this week: selling on rallies and selling breakthroughs of support.
Trading Idea: Primary trade will be to fade a rally into the 1.3375-1.3400 resistance zone, preferably with candlestick signal. This provides a nice large round # and also is just under the 38.2% retracement of the recent fall to hide a stop-loss behind and get a decent risk/reward ratio. Targets from 1.3400 are 1.3370, 1.3340 and and 1.3305. Secondary trade is to short a sustained break of 1.3300 support with targets at 1.3275, 1.3245 ad 1.3215.
Identifying breakout opportunities together on lower timeframe charts is a great way to combine group efforts and a profitable strategy, FYI :).