EURCAD FX Signal: Italy Budget and Canada CPI

Reports that the European Union (EU) accepted the brexit deal failed trigger any significant reaction in global markets. The UK Parliament is expected to vote on the brexit deal on 11 December, 2018.

Reports that Italy may revise its 2019 budget (under 2.00% deficit) did trigger some volatility in the market as we have recently see in many currency pairs and crosses.

There is no guarantee at the time of this writing the deal will be accepted by the UK Parliament. We should say that both parties the EU and the UK are well-prepared for a no-deal scenario.

We may be in front of a global economic slowdown, the above reports temporarily shifted the market’s attention. President Trump thanked Saudi Arabia last week for contributing to crude oil’s recent weakness.

It is also important to note that a trade deal between in the US and EU has not been completed. President Trump threatened to impose new tariffs on imported automobiles from the euro zone. A trade deal between the US and China may negotiated in December, which is among the key events for the remaining month of 2018.

EURCAD Daily Chart

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EURCAD FX Signal: Italy Budget and Canada CPI

EURCAD Daily Chart 26/11/18

EURCAD broke above its resistance but failed to reach its technical target. The dip lower may act as a re-test of the broken resistance, which may lead to corrective gains in the cross. It is a fairly expensive trade to hold due to the negative swap but we are unlikely to remain in the trade for a long period of time.

We are aware that Canada GDP is due on Friday but the gains must materialize prior to the economic data, preferably due to  firm Euro. We are receiving a slightly worse price as we did consider opting for the trade after the opening of the Forex market. It is fairly minor given the volatility of EURCAD.

EURCAD Trade Alert

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EURCAD FX Signal: Italy Budget and Canada CPI

EURCAD Daily Chart II 26/11/18

EURCAD long at market price (ask 1.5015)
Take profit: 1.5290
Protective stop: 1.4875
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 10 days

Relevant as long as EURCAD is below 1.5060

Note: The potential drawdown is a re-test of 1.4910.

28/11/18 SIGNAL UPDATE: Fed Powell’s remarks triggered the recent volatility in the market. We require a firm daily close above 1.5100 that may indicate the potential corrective weakness may be minimal. As the price is still trading below 1.5100 as we near the daily close we decide to exit the long trade at market price (1.5094).

The potential retracement is around +60 pips, which is a large portion of the unrealized profit that we are unwilling to incur should it materialize.

EURNZD Trade Alert

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EURCAD FX Signal: Italy Budget and Canada CPI

EURNZD Daily Chart 29/11/18

EURNZD long at market price (ask 1.6605)
Take profit: 1.6975
Protective stop: 1.6448
Risk Ratio (RR): 1: 2.3 (approx.)
Estimated duration: 10 days

Relevant as long as EURNZD is below 1.6650.

Note: This is a daily entry. EURNZD must overcome 1.6800 in order to trade higher. As the price corrected higher in today’s session it may leave some room for retracements that can be absorbed.

We are relying on general EUR strength and Italy-related news. The potential drawdown is a re-test of 1.6558. We are also bearing in mind the monthly close. We are aware of the negative swap.

In an event we will be too close to the market prior to the weekly close we may be forced to temporarily shift the protective stop due to the spread widening on Sunday.

30/11/18 SIGNAL UPDATE: URNZD triggered the protective stop, we are not re-entering the market. EUR came under pressure following the CPI figures. NZDUSD remained in a fairly tight range while EURUSD traded lower, pressuring EURNZD.

GBPJPY Trade Alert

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EURCAD FX Signal: Italy Budget and Canada CPI

GBPJPY Daily Chart 05/12/18

GBPJPY short at market price (bid 144.34)
Take profit: 138.70
Protective stop: 146.50
Risk Ratio (RR): 1: 2.6 (approx.)
Estimated duration: 7 days

Relevant as long as GBPJPY is above 144.10

Note: This is a daily entry. The potential drawdown is a re-test of 145.90. The legal advice was recently published, no significant volatility took place. The main trigger for GBP is the UK Parliamentary vote on 11 December.

06/12/18 SIGNAL UPDATE: GBPJPY was pressed lower due to safe-haven flows rather than a weak GBP. Based on the current charts the price is positioned to correct near the entry if not beyond.

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EURCAD FX Signal: Italy Budget and Canada CPI

GBPJPY Daily Chart 06/12/18

Although the unrealized profit is fairly minimal we are unwilling to absorb such a retracement should it materialize. GBPJPY is trading at 143.68 at the time of this writing, we are closing the short trade at market price.

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