One of the most talked above topics that was discussed in 2010, and has been curiously missing from analysts assessments so far this year, is that of “risk” and “risk-aversion”. Given the recent dollar weakness and Euro strength one has to wonder if the recent good news coming from the US companies earnings statement isn’t causing a bit of a risk-on attitude. The question is – how long will it last given Euro fears?
Trading Idea: Primary trade will remain a short on a failure/strong candlestick signal near 1.3500 initially targeting 1.3475, 3445, 3415 and 3380 for 120 pips.
If we see a dip to 3400 then there is good reason to look for strong buy signals in this area to take advantage of the bullish trend, with targets back up to 1.3500 and beyond.
Finally if we see a pool of consolidation around 1.3500 then this will set up a breakout trade if price breaks above this level. Ideally in a breakout scenario we will see several candles on at least the 1h chart form a nice flat line as it tests the waters of 1.3500, that way when the break finally happens it is obvious compared to the previous candles.