Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
This week, we know that the Fx market has entered a new lull. The major news for a COVID-19 vaccine failed to trigger breakouts in Forex. Our potential USDJPY buy trade idea hasn’t been triggered either, as the pair slipped lower instead of breaking the resistance area. EURUSD, in the meantime, is not showing any sign of directional movement.
The sideways price action doesn’t mean that we should be asleep to potential opportunities, however — quite the opposite. As you probably know, calm market periods tend to lead to breakouts and large continuation moves. On that note, USDJPY still seems more likely to move up once the spreading rate of new COVID-19 infections slows, and investors refocus on the positive news for the vaccines. Nonetheless, until it happens, nothing is safe to be
assumed a done deal.
EURUSD trades very close to key resistance just as the focus should return to the December ECB meeting
EURUSD is stuck in a weird chart formation, though with a distinct resistance in the 1.1850 - 1.19 area. It trades in a range-type formation since the September low, which appears to have a slightly ascending direction instead of horizontal (see chart). However, the support trendline of this range is not confirmed yet. If we project a parallel of the existing resistance line, we get a support line that presently sits at
the 1.1675 zone and would rise to 1.17 by the end of this month (see chart below).
The 1.1850 - 1.19 resistance zone is strong. In addition, if we consider that the ECB meeting is three weeks away — when the central bank is expected to announce massive new QE stimulus — we arrive at the conclusion that the most likely direction for EURUSD from here is lower.
However, the question then is, how low EURUSD can go before the ECB meeting on December 10. And that is the more tricky part of the equation. Not very lower by much, probably. But the 1.1750 support zone seems achievable.
Watching the 1-hour chart for a bearish breakout to trigger the next leg down
To find potential trading opportunities from the conclusions outlined above, we are watching the 1-hour chart where EURUSD is rising in a clearly-defined channel formation. The support is at 1.1860, and the pair is attempting a bearish breakout at this moment.
If it completes the breakout, then we can expect EURUSD to move lower to 1.18 and the 1.1750 support zone discussed above. These price zones are also the targets of this potential trade.
The specifics are shown on the chart below:
Entry:
- Wait for a breakout of the described 1.1860 trendline support
- For higher conviction, wait for an hourly close below the trendline;
- A retest from the other side after the break would also be a great entry point
- Finally, also watch the daily chart, where a daily red candle would provide additional confirmation that sentiment has shifted.
Stop:
- EURUSD shouldn’t move above the 1.1890 highs once the support trendline is broken; hence these highs can be used to place the stop;
- Alternatively, for a tighter stop, you can place it above the specific entry pattern you’ll use
Targets:
Trade signals from the past week
- November 09 – Long EURCHF from 1.0730 on a breakout above 1.0725 (in progress)
TOTAL: N/A in the past week
TOTAL: +3055 pips profit since October 1, 2018
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Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
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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