China Trade War and New Signals for the Upcoming Week

US – China Trade War Update

China threatened to impose a 25% tariffs on imported goods from the US, including natural gas and hardwood. The escalating trade war between the US and China is yet to have a significant impact on the Foreign Exchange (Forex) market but it is keeping many currency pairs and crosses in a tight range.

The People’s Bank of China (PBOC) took action to prevent a steeper fall in the Yuan (CNY) against the US Dollar. The central bank’s intervention took place as a result of the ongoing trade war between China and the US. Apple became the firs one-trillion company, which did contribute to the gains we have seen in global indices on Friday.

The Bank of England (BOE) raised rates as expected but warned o the brexit risks. GBP was sold against a basket o currencies as the rate hike was almost fully priced-in. Although there are suggestions Europe may be willing to compromise on the UK boarder between Northern Ireland and Ireland there is still a long way for a brexit deal. One of obstacles that is being shadowed is Gibraltar.

There were already tensions between Spain and the UK over Gibraltar, the tension may resurface as we proceed into the second half of 2018.

CADCHF Signal Strategy: The Breakout

As we have updated via emails we were tracking CADCHF for some time. The cross posted a daily close above the neckline of a reversed H&S, which may suggest further gains in the cross.

Please click on the chart to enlarge:

CADCHF Daily Chart 5 August 2018

CADCHF Daily Chart 05/08/18

The breakout suggests CADCHF may be targeting 0.7780 as highlighted on the daily chart. The Canadian Dollar as been supported as some progress is made in the NAFTA negotiations and expectations from the Bank of Canada (BOC) to continue its rate hikes.

During breakouts the price may re-test the neckline before reversing lower. It is challenging to determine if a retracment will materialize. A gap lower may act as a retracement, which may provide us a with a long entry in the cross. We may wait for the spread to tighten after the opening of the Forex market.

EURAUD Signal Strategy: Still Bearish

We have attempted to short EURAUD based on a technical signal we received from the market. The cross has stuttered for several weeks until it eventually broke lower.

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EURAUD Weekly Chart 5 August 2018

EURAUD Weekly Chart 05/08/18

Please click on the chart to enlarge:

EURAUD Daily Chart 5 August 2018

EURAUD Daily Chart 05/08/18

We can no longer opt for EURAUD based on the weekly chart. However, a daily breakout took place. We require the market to re-test 1.5710 (approx.) to consider initiating a short signal in Euro Aussie. From a technical angle it may be better if the re-test takes place  by the next daily close but it may take longer.

We must highlight that such a re-test is not guaranteed to materialize and it should not be considered as a long entry.

The 3 key events this week are Canada’s employment figures, the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) monetary policies. As the UK Gross Domestic Product (GDP) is now a monthly figure the impact it may have on the market may be limited. We are also tracking EURNZD but it may take more time until we are able to initiate a trade in the cross.

Key economic events are due in September, particularity around brexit. it is too early determine whether the anticipated volatility will be seen in August.

We will issue an update after the opening of the Forex market. We remind that the current strategies are locked for members only until the presented analysis has exhausted itself.

CADCHF Trade Alert

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CADCHF Daily Chart II 5 August 2018

CADCHF Daily Chart II 05/08/18

CADCHF long at market price (ask 0.7658)
Take profit: 0.7825
Protective stop: 0.7580
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 14 days

Relevant as long as CADCHF is below 0.7670

Note: The potential drawdown is a re-test of 0.7600. The key event for CAD is the economic data on Friday.

06/08/18 UPDATE: We are shifting CADCHF protective stop to 0.7594. The stop is shifted as this is a daily entry. We have the ability to tighten the protective stop even further but we wish to provide more room for the trade.

EURNZD Trade Alert

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China Trade War and New Signals for the Upcoming Week

EURNZD Daily Chart 06/08/18

Please click on the chart to enlarge:

China Trade War and New Signals for the Upcoming Week

EURNZD 60min Chart 06/08/18

EURNZD long at market price (ask 1.7167)
Take profit: 1.7475
Protective stop: 1.7010
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 14 days

Relevant as long as EURNZD is below 1.7190

Note: The potential drawdown is a re-test of 1.7070. If timed correctly the gains may materialize within the next 24 hours. The potential drawdown is slightly higher as it may be an early entry, which is the risk we are willing to take.

07/08/18 UPDATE: EURNZD has reached its hourly objective. To recap, we timed the entry via a shorter time frame. We are heavily relying on EURNZD to affirm the bullish flag and maintain the current uptrend.

Please click on the chart to enlarge:

China Trade War and New Signals for the Upcoming Week

EURNZD Daily Chart 07/08/18

As the hourly objective was acquired we are closing 30% of the EURNZD short trade at market price (1.7221), we will adjust the protective stop after the daily close.

07/08/18 UPDATE: We are shifting EURNZD protective stop to 1.7145. The inflation data from New Zealand (due in Asia) is the key event. Should EURNZD fail to affirm the flag the protective stop is unlikely to hold.

GBPAUD Trade Alert

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China Trade War and New Signals for the Upcoming Week

GBPAUD 4hr Chart 07/08/18

GBPAUD long at market price (ask 1.7442)
Take profit: 1.7618
Protective stop: 1.7354
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 7 days

Relevant as long as GBPAUD is below 1.7465

Note: This is a 4hr entry. We are slightly late with the long entry but we can tolerate the potential drawdown, which is a re-test of 1.7375. We are aware of the negative swap that will be incurred as a result of initiating the trade prior to the daily close.

RBA Lowe’s speech and economic data from China are the key events for GBPAUD.

08/08/18 UPDATE: GBPAUD triggered the protective stop as the support level we relied on gave way, we are not re-entering the market.

08/08/18 UPDATE II: We suspect CADCHF weakness may have ended. We are nevertheless providing more room for the trade as it traded near the protective stop earlier today. We are shifting the protective stop to 0.7589.

08/08/18 UPDATE III: We have analyzed NZD against a basket of currencies. There is no decisive direction where the currency may be heading due to the upcoming RBNZ monetary policy. There is a stronger case for NZD weakness but it is insufficient.

We decided to roll the trade into the RBNZ monetary policy despite the risks. We are shifting EURNZD protective stop to 1.7120 and tighten the take profit order to 1.7330. The RBNZ monetary policy may determine the outcome of the trade.

08/08/18 UPDATE IV: The RBNZ monetary policy triggered NZD weakness in the market.

Please click on the chart to enlarge:

China Trade War and New Signals for the Upcoming Week

EURNZD Daily Chart 08/08/18

We are closing EURNZD long trade at market price (1.7285).

09/08/18 UPDATE: We are shifting CADCHF protective stop 0.7580. CADCHF is trading at 0.7594 at the time of this writing.

10/08/18 UPDATE: CADCHF triggered the protective stop, we are not re-entering the market. Safe haven flows into CHF following the trade tension between China and the US pressed CADCHF lower.

All of the above trade updates were issued via email to our members. This page is accessible to all as all the trades in this page are closed.