Forex Signals – EUR/USD Triangle Trading
Yesterday Recap: 120 pips off some picture perfect trading yesterday as the pair bounced off the top of our pennant, kicking up bearish CP signals on all timeframes. The pair then made a clean bounce off an interim rising trend support (lower red line on today's chart) as expected, prompting me to close my short and await further signals. I ignored bullish signals at the rising support because they are in the middle of the pennant channel (though if you took them that would be another +60 pips for you).
Daily Outlook: Australia's bank raised their interest rates early this morning prompting a strong rise in the Aussie as it again tries to stay above 1.00 (parity). I don't think the pair has the strength to stand too far above parity for too long, but I'll wait for better signals before I test that assertion.
For the EUR/USD today I anticipate a "quiet before the storm" today as the markets away the barrage of fundamental data coming out Wednesday (interest rates, QE2 news and unemployment data, oh my). The pair is still well within its daily bullish pennant and skipping along interim support (red rising support on chart below). I prefer buying at the bottom of the pennant, but will watch for sell signals at the top and on a break of the interim support.
As always CandlePro users can check multiple pairs/timeframes for intraday candlestick signals and you should watch out for news events on the forex calendar.
Trading Idea: Primary trade will be a long near the bottom of the pennant with candle confirmation. Bottom is currently around 1.3750 and long targets from here will be 1.3775, 3800, 3830 and 3860 for 110 pips profit.
A more aggressive short would be a sell on a break below 1.3850 as the pair makes another challenge for the bottom of the pennant at 1.3750 (100 pips).
Finally another agressive short is a sell near the top of the the pennant, currently around 1.40. This will be a tough trade for me to take as the formation is bullish, the long-term trend is up and the interim rising support suggests bull strength, but if you know something I don't there is a good risk/reward here targeting the bottom of the pennant at 1.3850 for 150 pips.