Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
Fundamental factors suggest the likely direction for EURUSD is still down
Important events are up on the calendar for the Euro in the next two days, among others the Monetary Policy accounts of the latest ECB meeting tomorrow, and also, a speech by new ECB President Christine Lagarde on Friday.
But the most closely followed event will be the release of the latest set of services and manufacturing PMI surveys on Friday. The likely scenario is for a continuation of the weakness in the PMIs. Forecasters are already expecting the actual numbers to stay near the levels from the previous month.
Such a scenario should be bearish for the Euro, especially if the PMIs even show weaker results than the consensus expectations. This will continue to put pressure on the ECB to keep providing monetary easing and keep interest rates low. The Euro weakness in such a scenario is then likely to extend into the next week.
Another factor in favor of lower EURUSD is the fact that the US-China trade talks hit a roadblock again. King Dollar has started to rise again as a result, and EURUSD is turning south. If a deal is not reached soon (and it seems it won’t as in many cases over the past 1-2 years), then expect EURUSD to drift lower gradually.
We’ve got a bearish signal flashing on the daily chart here, which provides the opportunity for an attractive entry point with solid potential for profit if the weakness in the Euro economy continues, as discussed above.
1.1080 - 1.1100 resistance holds, near the 100-day moving average. We can see that this price zone has been important for EURUSD in several instances recently (as highlighted with the circles on the chart). A bearish signal at this resistance could be the start of another swing lower that could take EURUSD below 1.1000. This scenario should unfold (high likelihood) if the PMI data this Friday remains weak or is worse than the already low consensus forecasts.
If today’s candle closes in the red, it will form a bearish engulfing pattern on the daily chart. This would be our entry signal with an initial target toward 1.10 and additional targets below 1.10. But even with the initial target at 1.10, this trade would provide an almost 2:1 risk-reward ratio.
The stop would go above the highs of the bearish pattern and above the 100-day moving average (100 DMA orange line).
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- Look to enter after today’s close - if a bearish signal is formed on the daily chart as described.;
- Current levels around 1.1060 are an acceptable entry point.
Stop loss:
- Place the stop above the bearish signal and 100-day MA (1.11 resistance zone)
- Slightly above the 1.11 level would provide protection against fake moves at this resistance zone
Target:
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1st - 1.1000
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2nd - 1.0950
-
3rd - 1.0900
Trade signals from the past weeks
- November 05, 2019 - Long USDCAD from 1.3160, trailing stop hit at 1.3235 = +75 pips profit
- November 15, 2019 – Long USDCHF from 0.9890, allowed stop to be taken out at breakeven (as price action has been choppy) = 0 pips
- November 08, 2019 - Long NZDCAD from 0.8385 (still in progress), around +150 pips profit currently
TOTAL: +75 pips in the past week
TOTAL: +2165 pips profit since October 1, 2018
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Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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