Intraday Update! We let the charts develop a bit more this morning after last week's rally to give us a better view of the technicals.
Recap: Friday afternoon continued the massive bullish rally that began Friday morning, as the pair rose almost 260 pips in a single day. All this occurred after the EU summit where the markets had expectations of absolutely nothing getting accomplished - and instead came out with at least a sliver of hope (easier access to funding for banks). That sliver of hope was so unexpected that a massive short squeeze occurred.
We don't see this rally as being sustainable over the long run and view it more as a short squeeze, as we mentioned above, given the still fragile state of the PIGS countries in Europe. Technically the pair is forming a flag pattern (a bullish pattern) that we will look to get long off of, but with the bearish tint we will be looking to close and get short to ride this pair back down.
Today's Important News Events:
Date Time (UTC) Event Forecast Previous
USD ISM Manufacturing (JUN)
Trading Idea: We will look to get long on this bullish flag pattern with a resistance break, targets at 20/20/20/20 for 80 pips. We are long term bearish, however, and will look to close and get short on any support break that occurs with targets at 90 pips. We will of course close our long on a false break as one has already occurred on the 8:00 UTC candle.