Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
For this week, we are considering a potential short EURCAD in addition to our already existing short EURUSD (issued last week) and as part of our overall bullish USD outlook (see our open trades at the bottom of this message).
As you probably know, it’s Nonfarm payrolls day, and in addition, Canadian jobs data was just released at the same time. Both reports came in moderately strong, which means the USD and CAD should be supported today, especially against the EUR and GBP.
In line with this, we are looking for EURCAD to break its recent range to the downside and extend the bearish trend some 100-300 pips lower.
EURCAD Fundamentals: Dovish ECB vs. Hawkish BOC to Keep Bearish Forces Intact
On the fundamental side, the picture is clear. There is a wide divergence between ECB and BOC policy both currently and for the foreseeable future. The Bank of Canada is one of the most hawkish central banks of the 8 major currencies, while the European Central Bank is one of the most dovish. This
divergence has been pulling EURCAD lower for a while and is likely to continue to do so in the coming weeks.
Furthermore, the continued strength in oil prices this year, as well as commodities in general, is also helping the CAD to a great degree. Oil analysts continue to expect strength in the market, and some are even forecasting a further rise to 100 $/barrel. This, coupled with a strong
economy, and a hawkish Bank of Canada, should keep the Canadian dollar among the top performers in the Fx market in the period ahead.
EURCAD has been consolidating in a range since mid-October following the steep fall from the 1.50 area. Ultimately, the range is likely to break to the downside (as described above), and EURCAD could reach the 1.40 area.
In line with this, we are entering short EURCAD today following the solid Canadian jobs reports today. Furthermore, the US Nonfarm payrolls also beat expectations which should keep EURUSD downwardly pressured and should help to keep the EUR generally
weak.
In the meantime, the USDCAD is close to an important resistance area at 1.25, which means that the path of least resistance is likely lower from here. This should lead to an even faster decline in EURCAD than in EURUSD. But as always in trading, it remains to be seen what will happen as the market
always has the last word.
Entry:
- Short EURCAD around current levels near 1.4350
Stop:
- Above 1.4460;
- Also, watch what is happening in EURUSD and USDCAD; If USDCAD keeps pushing higher while EURUSD struggles to move down, then it could be a warning sign that this trade may not work as expected.
Targets:
- Toward the 1.40-1.41 area;
- Since this is a trend trade, use the Parabolic SAR for a trailing stop loss; in case it reverses before it reaches the target the Parabolic SAR will protect you from giving back gains.
Trade signals from past week
- October 28, 2021 – Long USDCHF from 0.9135 (trade idea sent Oct 21)
- November 4, 2021 – Short EURUSD from 1.1585, triggered following the Fed meeting (trade idea sent on Oct 29)
- November 4, 2021 – Short GBPUSD from 1.3570, triggered following the BOE announcement yesterday (trade idea sent on Oct 15, in progress toward 1st target at 1.34)
TOTAL: 0 pips in the past week
TOTAL: +4035 pips profit since October 1, 2018
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Thank you!
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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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