Daily Outlook: Thanks to the bearish movements last week that we were able to profit off of, a short-term top is now in place around 1.3870. On the weekly chart below we can see that after a brief bull rally the pair has stalled out below this level, and last week put in a bearish, long-wicked doji that just touched 1.3860 before dropping back down to the 1.3570 region (where price is currently).
As long as this doji remains valid (i.e. 1.3870 is unbroken) then we will look for further downside movement and rallies to sell into. Be aware that the last time the weekly chart showed dojis (October of 2010) it took three (poorly formed) dojis before the pair finally reversed - and that was after couple hundred pip extinction burst. The point is that we could see some consolidation here over the next couple weeks if history is any guide, but that regardless of this consolidation selling into rallies has a higher chance of success than buying dips.
On the 1h chart we can see that 1.3620, previously strong support, is now rejecting price and acting as resistance, while 1.3680 looms above that as strong resistance should 3620 be broken.
Trading Idea: The most conservative trade of the week would be a short near 1.3850 - almost 260 pips away and not likely to be hit tomorrow. While we wait for this setup to develop the short-term trend is bearish with 1.3620 acting as resistance. We will remain short-term bearish below this level with targets at 1.3600, 3575, 3550 and 3525 for 95 pips. If 3630 is broken to the upside then 3650, 3680 and 3720 await as resistance challenges.