If you examine the price history of this market since January, you will see that it is clearly in a range bound environment. As price gyrates between the two converging , it may be tempting to take trade signals simply because one appears. That is not a good idea because as I have written before not all signals are created equal. There is a high degree of randomness in any financial market and our job as a price action trader is the minimize randomness in order to improve our chances of a profitable outcome. The middle of any range bound market is the MOST random area for price action. Essentially, price can go either way from this middle and there is no reliable or consistent way to gain an advantage.
Price at the moment is gyrating in the middle of this large range. Even if it appears to be going lower, anything can happen at the current level. The 1.2268 to 1.2220 (.618 of recent structure) serves as a reference point to consider longs, but if I am going to take risk, I want the probability to be most in my favor. In this context, the best area for the most potential would be the 1.2181 level. This is the reversal zone boundary relative to the 1.2214 low. This is where the likelihood of a fake out is the greatest.
Remember when it comes to trading the forex market, I am very short term. I am only interested in day trades or swing trades. 30 to 50 pip targets are reasonable on this time frame. Taking these profits while they are available is key because there are too many economic variables that affect these markets which can rob you of your profits quickly. There is no sign of a setup at the moment, but if one appears within a predetermined level that makes sense in terms of probability, it will be posted on S.C.