Daily Outlook: While the medium- and long- term trends are still strong to downside the bulls are showing a little rumbling of life here as they've found a rising trend support on the 1h (bottom blue line on chart) that forms a nice triangle pattern with the falling resistance. 1.2234, yesterday's low, is the lowest the pair has been since 2006, and we now have 1.2300, 1.2170 and eventually 1.16 in our sights. Some analysts are predicting parity (1.00) by the end of 2010.
We have a few news items tomorrow (see forex calendar) with German data which is expected to be positive. This might be the excuse bulls are looking for to drive the price up a bit more before we begin our downward descent.
Trading Idea: My primary strategy will be to continue selling on rallies - a very profitable strategy over the past several weeks now. 1.2440 and 1.2500 both offer areas to look for selling if we see a retracement. Short targets from 1.2440 are 1.2415, 1.2390, 1.2360, 1.2330 and 1.2305 for 135 pips profit.
Secondary trade is a short on a sustained break of the bottom rising trend support (currently at 1.2310) with short targets down to 1.2285, 1.2255, 1.2225 and 1.2200.
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