Another trade setup would be a short on a rally to the 1.2300 vicinity with confirmation and targets down to 1.2100. Don’t forget to watch the candlestick alerts for more trade setups.
We had that rally to just under 1.2300 (price got to 1.2297, just 3 pips short), then dropped down to give us a nice long wick on a shooting star for the 15:00 GMT candle - which showed up on the candlestick alert system in case you missed it! I let the price retrace a little to get a better risk/reward and then took a single lot short at 1.2285 and eventually took profit at 1.2205 for 80 pips profit. Not too shabby for just one of the pairs I was trading this Monday.
Daily Outlook: I mentioned yesterday that the short-term bullish trend was gaining speed and we have lots of confirmation today as you can clearly see three rising trend supports on my chart below. These three rising trend supports are classically called fans and indicate an increase in buying momentum. For those of you who have been PipHutters the longest know that I use no indicators 99.9% of the time, but this rise in bullish trend can be confirmed with a very high ADX at the moment.
This rise in bullish momentum would seem to indicate that bulls are back in favor, which is true, but in my experience it can also signal that the correction is coming to an end just as often as a constantly accelerating trend is impossible to sustain as the slope would eventually reach infinite. Combined with that, and as I mentioned in the comments yesterday even though we have short-term bullish momentum I still feel more comfortable selling than buying because the longer-term trend is down.
On the charts as well you can see we still have the falling trend resistance (from the daily charts) that I expect to cap any short-term gains in the pair.
Trading Idea: Primary trade is to look for a short opportunity on a rapid move upward in the 1.2350 resistance zone. Short targets from this area are 1.2325, 1.2300, 1.2270, 1.2240 and 1.2205 for 145 pips profit. A secondary trade would be a long at the very bottom support level (currently around 1.2060) - an aggressive move here would be to take it without confirmation as the first bounce on a re-test of good support can be the best. A more aggressive trade would be a short on a failure of the 1.2280 resistance. Yet another trading setup would be a short on a sustained break of each fan line, targeting the fan line directly beneath it.