Daily Outlook: Last Friday's short paid handsomely before the break as the pair charged through its rising trend support that we have been watching/trading for the past couple weeks for a nice 160+ pip drop in just a few hours on Friday. Not to mention we lit up the pip charts in PRO analysis toward the end of last week :).
Whether it was Egyptian riots spooking the markets, more European worries or just a long overdue correction doesn't matter to us: we had our technical reasons for entering short (which we detailed in Friday's post) and, as often happens, the markets reacted to whatever the flavor of the day was to fall in line with the chart's technical outlook. Barring some (major) government intervention here we are looking for more EUR/USD losses this week, and have taken a speculative single lot short on the 07:00 GMT 1h doji (body is a bit big but the body/wick ratio is there and CP gives it a solid reward/risk ratio). If this aggressive short fails we will look to re-short in the 1.3700 vicinity with the expectation that the 61.8% retracement (around 1.3750) will again hold against any stray bulls ;).
Trading Idea: Though we are short on an aggressive doji around 3615 (detailed above and circled on chart) we will list the conservative trade as the primary - short in the area of 1.3680-3700 resistance with targets down to 3580 in 25 pip target chunks.
For our aggressive short around 3615 we are targeting 3590, 3560, 3530 and 3505.