Daily Outlook: Watching the markets yesterday was as fun as watching paint dry as the pair slowly consolidated between 3950 and 3880. Our primary got activated as the pair made a sustained break above our falling trend resistance from yesterday on the 07:00 candle (you can see yesterday's resistance on today's chart below; it is the top orange line). We got long from 1.3930 (candle close) which hit our first target as the pair got +30 into the profit. Since we only trading with a single lot, however, we just tightened our stop-loss instead of taking profit and ended up with a small loss when the price reversed a few hours later.
Price has been choppy since then, as we mentioned above, consolidating between 3880-3950 as the pair seeks direction. On one hand we believe that 1.41 is still the natural target of the pair in the medium term, but on the other hand this consolidation under 1.40 has created a lot of bearish tension on the pair, which still has a bearish tint on the daily charts. To accommodate this mixed outlook / consolidation we are switching to a breakout play:
Trading Idea: We are looking for two trades in this breakout play, but since the pair has been bearish short term the bullish trade is our primary - long on a sustained break above 3950 with targets at 3975, 4000, 4030 and 4060 for 110 pips profit. We will tighten around 1.40 on signs of reversal as 1.40 is a significant psychological resistance level.