A quick note: I am traveling this week! I will be traveling the great state of Hawaii on a mini-vacation. While I will continue to post my EUR/USD analysis it might come out a little earlier/later than usual and I also will not be around in the comments section to chat. Just an FYI. Also, I ran into some glitches with the trading groups feature that I didn't have time fix before leaving so you'll have to wait until next week!
Daily Outlook: Opened with a small gap on Sunday as news of a (more) finalized bailout package for Greece spread. Germany doesn't want to spend any money on the Greeks but they want the Euro to collapse even less. To get the bailout package they had to agree to a very, very aggressive debt reduction plan that I have serious doubts they can meet. This may cause temporary fundamental relief but temporary is the key word: there are too many what ifs hanging over the Euro right now - what if Portugal needs a bailout? Or Spain? Or Greece can't live up to the terms of its bailout?
Technically, while we have seen a bullish retracement at the end of last week we are still caught in a very bearish trend since December of 2009 (back out to the daily/weekly charts) and a bearish channel for the past month. Check out my daily chart below for a better view of this medium term channel.
Bulls are searching for a reason to buy, but ultimately (coming weeks) bears will win out on this one. For that reason I will continue to look to sell on rallies as that is the higher-probability setup.
Trading Idea:Ultimately, and the most conservative Monday trade would be to sell near the top of the bearish channel, currently at 1.3600. However this is a ways away at the moment and not likely to be hit today. A more aggressive day trade would be short on an extinction candle (long wicks, shooting star, etc) between 1.3400-1.3400 with short targets at 1.3400, 1.3370, 1.3340 and 1.3310 for 90 pips profit. A very aggressive trade would be a short at 1.3340 with a tight stop (as a break above this level opens up 1.3400 and 1.3440 in the short-term) with targets down to 1.3310, 1.3290 and 1.3265.
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