5:14a GMT - Shooting stars on the 30m chart have really been providing solid sell signals for me the past few weeks - have you all noticed the same thing? In general if the star is near resistance and is higher than the 10 or so preceding candles (meaning that it qualifies as an ‘extinction' candle) it has been a very reliable sell signal. Take a look at the 30m chart below with shooting stars circled in blue:

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Of course nearly anything has been a good sell signal this week - the EURUSD has dropped almost 500 pips since December 3rd! That includes our signal from yesterday too - we had a near picture perfect pierce of our resistance at 1.4775 with the tip of a shooting star (10:30 GMT on the 30m charts) that was quickly followed by a nice drop. If you missed the first entry the markets were kind enough to provide a second opportunity to enter above 1.4770 a few hours later on a 13:00 GMT rally. I ended up covering at 1.4700 after my third target at 1.4670 was not reached for +75 pips profit.

On to today - you can view the forex calendar here but we have the GBP and CHF announcing rate decisions (12:00 and 8:30 GMT, respectively), trade balances for the USD and CAD (13:30 GMT) and initial jobless claims for USD (13:30 GMT). The news I'm watching closely is the US initial jobless claims. It was a jobs report last week that sent the USD on its major rally and I believe it will be this report that defines the direction of the pair for the coming days.

Daily Outlook: On the 4-hour chart below we can clearly see that after the strong rising trend support was broken the pair has entered into what appears to be a bearish continuation pattern -(aka a death spiral). Technical outlook is therefore extremely bearish in the short-term however we have the big news events mentioned above that could thin out markets and make for some aimless ranging in the morning hours.

Trading Idea: I will stay out of the EURUSD until the news has been announced at 13:30 GMT. Until then there might be some (very short-term) trades worth taking at the top of the 30m channel  (shown above) where the last shooting star just touched off of. Also a break below 1.4700 will most likely open way to another challenge of 1.4670 for a quick 30 pips. After news events I will look for a shorting opportunity off of 1.4750 with targets at 1.4715, 1.4675 and 1.4640.

(click to enlarge)
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