Short signal today. Pair hit 2300 yesterday (primary signal) and the dropped nicely over 100 pips to trade below 2200. EURUSD is currently trading around 1.2213.
Daily Outlook: 1.2300 resistance held and this is a good bearish sign. Fears of a double-dip recession or a prolonged depression are hard to avoid even in mainstream news these days (unless they are quoting a central banker). What this means for us is that the USD gains appeal as it is a reserve currency and as traders take money out of stocks and other high-risk investment vehicles they will purchase dollars thereby driving the USD up.
Technically the pair is forming a bearish channel (thick blue lines on my 4h chart below) and I will continue to look for opportunities to sell. Watch the forex calendar as Initial Jobless Claims, pending home sales and lots of other data is due out.
Initial jobless claims is forecast to come in around 460k. I see the results in light of risk aversion (which reacts the opposite to how you'd expect it to act): a lot lower than that and risk-appetite will evaporate in the market as double-dip talk skyrockets. This will drive reserve currencies which will push the EUR/USD down.
Trading Idea: Primary and most conservative trade will be a short at the top of this bearish channel, currently around 1.2340. I can get a nice risk/reward off of this, putting my SL 50-60 pips up and targeting 150-200 pips. Short targets from 1.2340 are 1.2310, 1.2280, 1.2255, 1.2220 and eventually the bottom of the channel around 1.2150.
A more aggressive trade would be a short on the break of the short-term rising trend support within the bearish channel (thin blue line on chart). This has been a profitable trade for the past few weeks as the pairs oscillates between support/resistance. A sustained break below 1.2200 on at least the 1h would open up this trade with short targets at 1.2175, 1.2150 and 1.2125 for 75 pips profit.