4:28a GMT - Another picture perfect signal yesterday as the price just kissed our resistance at 1.4750 after the news passed and then formed a shooting star on both the 30m and 1h charts. I know many of you profited off this but unfortunately I was outside shoveling myself out of 40+ cm (15 inches) of snow and missed the signal.
Daily Outlook: This week we have seen a major bearish break of daily support, a quick drop and currently the pair is consolidating in a triangular wedge patter. In general this type of pattern is a consolidation pattern - meaning it is a bearish signal because the preceding flag is bearish. As such I am biased toward the downside. It is the end of the week and we do have some news tomorrow (EUR Trichet speaks at 12:15, USD retail data at 13:30) - all of which can increase volatility. I expect one of the news events to push us out of this wedge pattern.
Trading Idea: 1.4775 is the key bearish resistance level - as long as this holds I will remain bearish on the pair. If the wedge is broken to the upside I will look for signals to sell below this level. If the bottom of the wedge is broken (currently around 1.4700) that opens a challenge of 1.4665, 1.4635 and 1.4600. Short targets from 1.4775 are 1.4745, 1.4710 and 1.4670. If 1.4775 is broken to the upside it puts 1.4850 back into play as a long target.