Daily Outlook: The market is still teetering on the theme of risk. On one hand we have Greece, with Portugal, Italy, Ireland and Spain not too far behind, threatening the unity of the European Union. In the states we have more financial trouble (Goldman Sachs) and financial reform coming. At the end of the day I think both are a bit overdone subjects, though the dissolution of a union definitely outweighs a banking scandal. Fundanentally I am looking for a bit of capitulation on risk trades before a return of risk appetite (Euro positive).
Technically we find ourselves in a bearish channel, and we are hovering on yesterday's support level of 1.3415-.13400. The pair has lost over 2000 pips since December of last year (on a loss of risk-appetite), and though I think we might see another challenge of 1.3250 in the coming days/weeks I expect to see a short-term bump as we scrape the bottom of this bearish channel.
Trading Idea: Going with the trend my primary trade idea is to sell near the top of the channel (currently 1.3580 but falling) with short targets at 1.3550, 1.3515, 1.3490 and 1.3465 (for 115 pips profit). I will consider taking a small long positition near the bottom of this channel on a good candlestick signal (between 1.3400-1.3370) with long targets at 1.3400, 1.3425, 1.3450 and 1.3480 (for 80 pips profit).
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