5:09a GMT -Welcome to another week PipHutters! Last week ended with a fizzle as one of my specific trade setups (long wick just touching 1.3630 resistance) occurred but too close to the end of the trading day to produce much of a result. I closed my short out at break even with the weekend approaching and it is a good thing - the pair has risen 70+ pips since opening a few hours ago.
Spurring the risk-taking was a speech by the French President offering support for France and saying, resolutely but still lacking any detail, that Europe was ready to support Greece with billions in aid. This sort of blank check support could drive risk taking (and the Euro) in the short term but any sign of dissension out of Germany should send the pair back to the depths.
Daily Outlook: short term outlook is bullish, longer-term outlook is bearish. A glance at the daily chart will show that the pair has been in a free fall since early December - a drop of almost 2000 pips since the Dec 3 high of 1.5400. We at PipHut have been selling all the way down and booking great pips as a result, but with the short-term picture a little murkier I will be going with the more conservative trades while still looking to fade rallies. The most obvious point of resistance is the falling trend resistance on the daily charts (connect Dec 3, 2009 high and Jan 14 high) that has not been broken in 2010.
Trading Idea: I will be looking in the resistance zone just below that falling trend line, between 1.3730-1.3750. Short targets from 1.3750 are 1.3715, 1.3680, 1.3650 and 1.3625. A much more aggressive move would be to look for a long in the 1.3585-1.3565 support zone to capitalize on short term bull trend, with longs targeting up to a re-challenge 1.3700.
(click to enlarge)