Euro Dollar Trading Strategy Ahead of Jackson Hole

EUR Technical Analysis

EUR pairs and crosses were heavily sold in today’s session, particularly EURGBP. The Bank of England (BOE) reverse auction in the bond markets were the trigger for the moderate gains that were seen in GBP pairs and crosses in today’s trading session. Although we had some concerns Yellen will attempt to hint a rate hike in September it appears EUR pairs and crosses are due to correct higher following today’s session.

EURAUD Daily Chart

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EURAUD Daily Chart 24/08/16

EURAUD Daily Chart 24/08/16

We were preparing to issue the short trade after the London close, however, due to the recent bullish retracement we may have to wait to the 4hr close. EURAUD broke above1.4795, today’s selling was a re-test of the support, which often takes place before a resumption of the downtrend. The spike lower as seen on the daily chart at the time of this writing triggered weak stops that attempted to capitalize over the breakout. The reason why we may wait for the 4hr close is because we cannot rule out a re-test of today’s lows. It seems unlikely at this stage but we are not in a hurry to place trade in the market.

The blue line marks the latter support, which may provide a re-entry if the protective stop is triggered.

EURUSD Daily Chart

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EURUSD Daily Chart 24/08/16

EURUSD Daily Chart 24/08/16

EURUSD recent weakness appears to be corrective, similar to EURAUD before a resumption of the uptrend. The price is still short of 1.1230 (which is also offers the 100MA support). The dip is likely to be spotted by many traders, which could lead to a brief spike below 1.1230 in order to flush weak stops as seen in EURAUD. If we enter Euro Dollar it means limited drawdown may be seen and must be anticipated even if it does not take place.

There may be a number of triggers for the rally such as the economic data that is due to be released on Thursday. We nevertheless suspect Friday will be the key day for the Euro.

EURUSD Trade Alert

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EURUSD Daily Chart II 24/08/16

EURUSD Daily Chart II 24/08/16

EURUSD long at market price (1.1255)
Take profit: 1.1470
Protective stop: 1.1168
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 7 days

Note: There may be a limited drawdown on the trade if the gains only materialize on Friday.

EURAUD Trade Alert

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EURAUD Daily Chart II 24/08/16

EURAUD Daily Chart II 24/08/16

EURAUD long at market price (1.4804)
Take profit: 1.5030
Protective stop: 1.4722
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 7 days

Note: We may incur a kick towards 1.4750. It is not guaranteed to take place but it must be anticipated.

26/08/16 UPDATE: We are displeased with EURAUD current progress.

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EURAUD 4hr Chart 26/08/16

EURAUD 4hr Chart 26/08/16

We are not a adopting a wait-and-see approach until the US GDP is released. EURAUD is trading at 1.4788 at the time of this writing, we are closing 30% of the long trade at market price.

26/08/16 UPDATE II: EURUSD is trading at 1.1287 at the time of this writing.

Please click on the chart to enlarge:

EURUSD Daily Chart 26/08/16

EURUSD Daily Chart 26/08/16

We are closing 20% of the long trade at market price and shift the protective stop to the entry.

26/08/16 UPDATE III: Yellen opening remarks at Jackson Hole triggered heavy USD buying as she suggested there is a strong case for a rate hike. EURAUD triggered the protective stop loss order, re-tested the latter support (in blue, which was our second entry) before correcting higher. EURUSD tested 1.1189, which suggests corrective gains are still due,

EURAUD Daily Chart

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EURAUD Daily Chart 28/06/16

EURAUD Daily Chart 28/06/16

EURUSD Daily Chart

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EURUSD Daily Chart 28/08/16

EURUSD Daily Chart 28/08/16

29/08/16 UPDATE: We have decided to re-enter EURUSD as the 1.1189 was able to contain the weakness on Friday’s daily close.

EURUSD Trade Alert

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EURUSD Daily Chart II 29/08/16

EURUSD Daily Chart II 29/08/16

EURUSD long at market price (1.1195)
Take profit:1.1410
Protective stop: 1.1124
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 14 days

13/09/16 UPDATE: EURUSD triggered the protective stop loss order of the long trade. The price then recovered and posted moderate gains following the NFP, however, we were no longer in the trade. Yellen’s opening remarks forced heavy selling in in the currency pair.

Euro Dollar Trading Strategy Ahead of Jackson Hole

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Euro Dollar Trading Strategy Ahead of Jackson Hole

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Euro Dollar Trading Strategy Ahead of Jackson Hole

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Euro Dollar Trading Strategy Ahead of Jackson Hole

Last Updated on September 13, 2016