Free Profitable Forex Newsletter
Hey! This is Philip with this week's Fx update of the Free Profitable Forex Newsletter!
Note: This is the last Fx email newsletter for this year. From tomorrow we'll take a 10-day break for the holidays. We'll be back with the next weekly analysis and trade ideas on the week starting January 4, 2021.
Enjoy the holidays, stay safe and well everyone, and see you here next year!
Careful with thin liquidity during the holidays
The holiday mood is apparently already setting in, and we continue to see some abnormal price moves in markets. Thin liquidity, profit-taking, and end of year rebalancing can be behind the action. For these reasons, it's usually best to stay away from trading during the holidays, aside from long-term positions you may be holding.
Watching the Georgia Senate Runoff on January 5
The main focus for the first week of the new year will be the US senate runoff election for the remaining two seats in the state of Georgia. It is a very important vote because if the Democrats win the two seats, they will also gain control of the Senate. With control of both houses of Congress, Joe Biden will be able to pass his policy plans into law more easily. This would likely mean more money printing, higher taxes, and more regulation on
companies, almost exactly the opposite of what Trump was doing. The presumption is, therefore, that if Democrats win the two seats, it would be more bearish for the dollar than if Republicans retain control of the Senate.
Dollar Is Still the King of Safe Havens
Aside from US politics, investors will continue to watch developments on the pandemic and Brexit. Both of these can directly impact risk sentiment, and therefore, effects would spread across most assets and currencies.
The extreme short USD positioning continues to pose a risk to a correction, something like we saw this Monday. Although that move was initially reversed, the situation confirms that the dollar is still "king" in times of risk aversion. This is something to keep watching as a potential risk and also for potential trading opportunities in early 2021.
EURUSD will also be at risk of a deeper correction if the dollar rebounds broadly. In such a scenario, the bullish dollar effects would likely spill over into precious metals, despite the long-term uptrend that is likely to persist there.
With that said, let's take a look at the technical situation on EURUSD and highlight key price zones that may come in focus in a bullish or bearish scenario.
Revisiting our EURUSD chart, we can see that the trend is challenged with yesterday's close in the red. The pair made nice gains for the year, and it's no surprise that some profit-taking may be overdue.
1.2150 seems like the pivotal price zone that should hold the uptrend intact, or if broken, open the gates to a deeper correction. In particular, the 1.2130 low of the tall Monday candle is a key level that, if taken out, would signal bulls' capitulation in the short-term and likely some acceleration of downside price action.
Still, such a correction is likely to provide a buyable dip in early 2021. The 1.20 area is now a big support to the downside. Below it, the 100-day and 55-day moving averages create a band of support around the 1.19 level. This 1.19 support needs to hold for the longer-term bullish dynamics to remain unharmed. Any break below 1.19 would seriously challenge that view.
Looking at potential bullish scenarios, the most bullish one is if the 1.2150 support holds and EURUSD quickly trades above 1.22 again. Then the pair will be on the path to 1.23 and 1.2350 again.
Around 1.23 - 1.2350, it would meet moderate resistance, but the big resistance remains in the 1.25 area. That means that with enough bullish momentum, EURUSD can appreciate to 1.25 without much trouble as long as the above described bullish dynamics remain in place.
Trade signals from the past week
- December 7, Long GBPUSD from 1.3375, closed at breakeven = 0 pips
- December 11, Long EURUSD from 1.2120, 1st target hit at 1.2200 = +80 pips profit
- December 16, Long Gold (XAU/USD) from $1,850, target reached at $1,900 = +$50 profit per ounce bought; assuming a similar sized position on a currency pair (in dollars), that would equate to around +250 pips profit
TOTAL: +330 pips profit in the past week
TOTAL: +3490 pips profit since October 1, 2018
If you have any questions or feedback, don't hesitate to reply to this email.
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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