Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
In an email two months ago (May 7), we flagged EURCHF as a potential longer-term bullish setup that could materialize in the weeks and months ahead. And indeed, EURCHF now reached the designated 1.0850 support area and is already bouncing here today.
Has the time to go long EURCHF arrived?
Probably. The current setup and risk-reward look too good to pass by. Therefore, we initiate a long EURCHF trade on the expectations that the pair will again move above 1.10 over the coming weeks and months.
The longer-term fundamentals for EURCHF remain bullish. Aside from some minor interruptions like the current surge of cases with the delta variant, the global recovery remains largely intact, and developed economies are expected to progress with the reopening of their
economies.
At the same time, ample monetary and fiscal stimulus should continue to support the recovery and the risk-on sentiment in markets. This should keep the Swiss franc on the weak side, which means EURCHF is still likely to sustainably move above 1.10 in the coming months.
If you want to view my previous analysis of EURCHF that was sent on May 7, 2021, you can find it here.
EURCHF has reached the 1.0850 support area
EURCHF was gradually falling since the March peak and is now testing the 1.0850 - 1.09 support area. The multiple highs from 2020 at the 1.0850 zone form a solid band of support, aided by the bullish channel support line that's standing nearby (see chart below).
EURCHF is trading inside of the bullish channel formation that started in the summer of 2020, and was confirmed with the bullish breakout in September/October 2020. The weekly technicals will remain bullish as long as this bullish channel stays intact. The channel will not be
challenged as long as EURCHF doesn't fall below 1.08 and persistently stays there. Hence this is the zone that we choose as a stop loss for this trade.
Another factor supporting a bounce here is the daily RSI which is at oversold levels currently. An oversold RSI at a strong support area is usually a solid technical signal that a bounce is coming.
What's needed to confirm a bullish reversal here
The current levels in the 1.0850 - 1.09 support area allow us to enter with a relatively tight stop (slightly below 1.08) and a fairly big profit target of 300 - 350 pips (toward 1.1150 - 1.12). The aim is to hold the position for a few months until the upside targets are achieved.
But, we are still very early in the stage of a potential EURCHF rally, and we can't know for sure if one is starting here. To do so, we need:
- As a first sign of strength, EURCHF needs to bounce here at 1.0850 and move swiftly above 1.09.
- As a second sign of strength, the pair needs to break the resistance of the descending channel formation, currently located around 1.0950 (see chart).
Once EURCHF has completed the above two steps, the path to more sustainable gains above 1.10 will be clearer. The minimum target in this scenario is the 1.1150 high from March.
Entry:
- Look to enter around current levels (1.0850) with an expected longer-term holding period (few months at least)
Stop:
- Below the 1.0850 support zone; e.g., levels below 1.0800 seem appropriate, and EURCHF should not move notably below 1.08 if this trade is going to work as expected.
- Hence, a stop loss somewhat below 1.08 looks appropriate
Targets:
- 1st - 1.10 (take partial profits)
- 2nd - 1.1150 - 1.12 (confluence March highs and monthly resistance)
Trade signals from past weeks
- • June 25, 2021 - Short GBPUSD from 1.39, 1st target reached at 1.38 = +100 pips profit
TOTAL: +100 pips profit in the past week
TOTAL: +3985 pips profit since October 1, 2018
If you have any questions or feedback, don't hesitate to reply to this email.
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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