4:24a GMT - A good day in PipLandia yesterday as all targets were hit for a good sum of pips.
We had a near picture-perfect setup as the pair just touched our falling trend support before dropping like a rock. In fact I listed three trade setups yesterday and no matter which one you might have gone with it produced positive pippage. On a side note it is setups like these that re-affirm my belief in technical analysis. There are many skeptics out there, and many with convincing arguments about the downfalls of TA, but when a pair just touches a level I've been watching for day/weeks and then reacts perfectly it warms my heart. As always, however, make sure to use good money management. A perfect setup can still go sour in the forex world and that is just part of the game.
Daily Outlook: We had a major bearish movement yesterday and it was clear the bears had more power behind their punch than the bulls did, however the pair failed to challenge the 1.3440 support. In fact it found support at 1.3500 and if you connect the lows from yesterday to the lows on Feb 19 we can see a potential rising trend support that combined with the falling trend resistance forms a nice triangle consolidation pattern. While this is just a potential scenario at this point it would not surprise me in the least to see the pair consolidate in this pattern for at least another day. Overall my analysis is still very bearish so I will continue to look for selling opps on rallies.
Trading Idea: There are two levels of resistance above our current price action I will look for shorting opportunities, depending on risk. First is 1.3580, former support (and now resistance). From this area I would look for a re-challenge of 1.3500. A higher probability trade would be in the vicinity of the falling trend resistance around 1.3650. From 1.3650 short targets are 1.3615, 1.3580 and 1.3550. A secondary setup is a sustained break of the lower rising trend support which I would look to produce a challenge of 1.3450.