Daily Outlook: The pair didn't move much yesterday as bulls and bears more or less seemed to reach an equilibrium on the price. It has been quite the bullish run over the past 2 weeks, with 6 of the past 8 days closing as bullish candles. And even though I have been looking for shorts with the longer-term bearish trend, with the conservative trade plan we're still batting 100% for the week.
We'll have a few trade setups to watch today with the pair resting just above one of the rising trend supports that the pair has respected all week. Below 1.2250 I expect losses to accelerate to 1.2200 and 1.2150, while above 1.2350 it opens up 1.2390 and 1.2450.
Watch out for the news tomorrow with inflation data and initial jobless claims for the US economy. There are a few other significant events for other pairs as well, so make sure to check out the full forex calendar.
Trading Idea: My primary trade is a long with a good signal at rising trend support (currently 1.2250) with targets at 1.2280, 1.2310, 1.2335 and 1.2360 for 105 pips profit. I'll only use a single lot on that, however, and I'll keep a tight stop on it. Close behind this one is a more aggressive short on a sustained break of 1.2250 with short targets at 1.2225, 1.2195, 1.2165 and 1.2150 for 110 pips profit.
Finally if we see a a bullish move I'll consider going short at falling trend resistance, currently at 1.2420.