Daily Outlook: Investor's perspectives are changing rapidly as a mood fell over the markets yesterday that the bottom was near falling out. The US stock markets turned in some of the worst days since 2008, with Asian markets also taking a beating when they opened this morning.
The pair never rallied enough for us to get our short entry yesterday, but did continue downward until it finally found some buyers (or at least profit-takers) above 1.4050. We won't be trading today because it is Friday, but with the bearish headwind this pair has right now our preferred strategy would be to sell any rallies under 1.4200. The biggest threat to the trade is just how oversold the pair is technically, and with Friday's low-volume conditions that can either make for a very volatile day (stop loss hunting) or a very boring day (no big trades to move markets).
Trading Idea: As mentioned above we are not trading today due to Friday's thin volume conditions, but for aggressive traders our strategy would have been to sell on any rallies to 1.4200 (with candlestick confirmation or a break below rising trend support) with targets at 4175, 4150, 4120 and 4090 for 110 pips profit. Really shorting any downside break of rising trend support lines right now would be our strategy as the odds appear to be stacked in the bear's favor.
Have a great weekend and see you next week.