Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
EURCHF Attacking The Lows Again; Potential Buying Opportunities Next Week After EU Parliamentary Election
The unprecedented subdued volatility in the Forex market persists as traders and investors are bracing for a potentially turbulent period ahead. Several uncertainties are concerning investors, such as the US-China trade war, Brexit and deceleration of global growth, which are likely playing a large part in the whole low volatility, rangy price behavior that we see at the moment.
In times like these, when there are no trends, looking to trade ranges and reversals can pay off better than betting on breakouts of those ranges. By the same token, trading in such an environment usually also means that price action reverses rather quickly and any profits the market has given us may be taken away faster than you can say Jack Robinson.
EURCHF is continuing the slide this week as markets are pricing in risks for the upcoming EU election that is held starting today and will last throughout the weekend across EU countries. The results will be known on Sunday and will impact the Euro based on the performance of pro-EU and anti-EU parties.
Deteriorating Brexit sentiment and trade wars are also keeping the CHF firm broadly and are weighing on EURCHF further, hence a test of the 1.1150 lows seems fairly likely at this point.
But, that could start to change next week if there is a Euro positive result form the election and particularly if markets begin to react positively overall to the outcome. In that case, it could mark another low (4th since September 2018) for EURCHF in the 1.1150 - 1.1200 support area.
For that, specifically, we’ll be watching the price action to see if it is bouncing early next week in response to the results of the EU election. A good performance from pro-EU parties is the desired outcome for the Euro currency and one that should help EURCHF curve out another bottom here.
Technicals - Potential Long Trade
EURCHF has been trading in a tight range between 1.1150 and 1.1450 for more than nine months now (since August-September last year). As we can see on the chart below, EURCHF bounced every time it touched the aforementioned support area around 1.1150 - 1.1200.
Technically, we need to see a bounce coupled with a bullish pattern or signal in this area to confirm the support. In that case, the area to target will be the upper end of the range toward 1.1500.
- Look to buy in the 1.1150 - 1.1200 support area at the bottom of the 9-month trading range
Stop loss:
- Below the 1.1150 - 1.1200 support area
Targets:
- Toward the 1.1450 - 1.1500 resistance and upper end of the range
The risk to this trade and EURCHF breaking the range lower is a further deterioration in risk sentiment via an escalation on any of the potential risk scenarios at the moment (US-China, Brexit, EU elections or world economy declining further).
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