Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
Happy weekend everyone! I hope you are doing great and that this trade idea will help you in next week’s trading. Also note, that the next weekly analysis and trade signal newsletter will be the last before I head off for a two week holiday from August 10.
Buy EURCHF For a Move to 1.10 and Above
EURCHF bottomed in May, and after consolidating in June, started what seems like a new bullish leg driven by the news of a deal on the Next-Generation EU Recovery Fund.
EURCHF broke the 2-year resistance trendline in May when the €750 billion recovery fund was only a proposal. It then came back down in a retracement, but the recent bullish move is promising that it will finally break the resistance trendline for good (see chart below).
Some traders may see another trendline on this chart (dashed line) currently standing around the 1.08 level. They may as well be right, and this trendline may hold off the bullish attempt forcing EURCHF to return inside the 2-year bearish channel.
EURCHF Fundamentals support bullish break of the trendline
The approval of the Next-Generation EU plan kickstarted another broad euro rally. The fundamentals provide a tailwind for the bullish breakout of the trendline and put the probabilities in favor of a move higher. EURCHF is likely to reach 1.10 in the coming weeks on repricing of EU existential risks (that’s 250 pips higher from Friday’s close around 1.0750).
The €750 billion recovery fund is enough for investors to price out some of the EU-breakup fears that were building up in the months before and around the corona crisis. European leaders again showed they are capable of taking big steps to save the Eurozone and the market is rewarding the euro for that.
With the EUR optimism so strong, it would be logical for EURCHF to correct higher on the positive developments. Not to mention that the Swiss National Bank will welcome such an event, and may even help it.
The technical situation is turning bullish; however, that second resistance trendline is the last hurdle to complete the bullish breakout. The other resistance trendline that was broken in May should provide support, if the price comes down again. This support now sits around the 1.06 level.
Based on the overall picture, moves below 1.07 (if any at all) are unlikely to be sustainable. Therefore, it would be prudent to look for buying opportunities on bullish signals or patterns below 1.07.
Also, keep in mind, there is a reasonable probability that EURCHF will not test 1.07 at all and continue to ascend from the current levels without looking back. In such a scenario, a break above 1.08 (the 2nd trendline) is needed to definitely confirm the trend change on the weekly chart.
Entry:
- Look to buy potential quick dips below 1.07 on bullish signals (e.g. a bounce); or
- If EURCHF pushes through the 1.08 resistance, that would be a valid signal to go long too; note, however, in this case, the target would be lower, and the stop may need to be larger compared to a buy the dip scenario.
Stop loss:
- Below the buy entry pattern/signal
- Ultimately, 1.06 should hold; if it doesn’t then this setup would be canceled
Targets:
- 1st: 1.10 area
- 2nd: 1.1150 resistance
Trade signals from the past week
- July 10 Long EURAUD from 1.6295 (in progress +190 pips)
TOTAL: 0 pips in the past week
TOTAL: +2600 pips profit since October 1, 2018
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Thank you!
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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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