The Euro, the PBOC and Our FX Technical Strategy

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EUR Technical Analysis

We have been monitoring EURUSD and EURUSD in the Foreign Exchange (Forex) market. Weak industrial data sent Euro Dollar on Wednesday’s session but a swift recovery was noted in today’s session. EURCAD suffered from moderate gains in crude oil as well as a weak Euro but similar to EURUSD the weakness has been contained. As we have stated on multiple occasions we suspect EUR gains are far from over in the market.

EURCAD Weekly Chart

Please click on the chart to enlarge:

EURCAD Weekly Chart 14/04/16

EURCAD Weekly Chart 14/04/16

EURCAD weakness began at the formation of the top Head-And-Shoulders (H&S). The recent dip lower is part of the H&S structure but creates scope for corrective gains. The 5ral 5 Moving Average (MA, in pink) acts as the nearest support as seen on the weekly chart. Although the top H&S has yet to reach its objective the broader outlook still creates room for a bullish retracement and possibly a medium-term uptrend. By the book we are supposed to wait for the weekly close.

We suspect China Gross Domestic Product (GDP) that is due at 02:00am GMT could be the trigger for EURCAD gains. If EURCAD corrects higher on Friday the entry will sill be valid but the required stop will be substantially higher, which may make the trade unworthy. The potential gains for Friday are between 100 – 140 pips but please note it is an early estimation and the gains may only be seen the following week.

EURUSD Daily Chart

Please click on the chart to enlarge:

EURUSD Daily Chart 14/04/16

EURUSD Daily Chart 14/04/16

The potential for a corrective gains are also noted in EURUSD. As opposed to EURCAD it is a possible daily entry, which leads us to believe the Euro itself is due for corrective gains.

We are preferring EURCAD over EURUSD at the time of this writing. There is a risk the People’s Bank of China (PBOC) will intervene in the market due to the GDP figures. If the PBOC takes action the commodity currencies (CAD is one of the commodity currencies) will weaken against a basket of currencies. If the PBOC is not the trigger it may be due to a healthy retracement.

As you may already know crude oil posted moderate gains following reports that a deal has been struck between Saudi Arabia and Russia to freeze the current crude oil production levels. There is still great uncertainty how low will these levels be. If the production levels disappoint the market expectations crude oil will be heavily sold, thus weakening the Canadian Dollar against a basket of currencies.

We repeat that EURCAD trade alert setup required a weekly close by the book but we may opt for a trade in today’s session, counting on China GDP (possibly PBOC) to be the initial trigger for the gains. There is a limited risk in entering the trade before the weekly close as we are using the weekly chart. It is a risk we are willing to take.

EURCAD Trade Alert Details

As this is a weekly chart we may incur a kick of -95 pips, which is tolerable bearing mind it is a cross and it is a weekly entry. Please note we will be monitoring EURCAD through the Asian session until 02:00am GMT (China GDP). There is no guarantee we will incur but it must be acknowledged.

Please click on the chart to enlarge:

EURCAD Weekly Chart II 14/04/16

EURCAD Weekly Chart II 14/04/16

EURCAD long at market price (1.4472)
Take profit: 1.4870
Protective stop: 1.4328
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 7 days

15/04/16 UPDATE: We incurred a -65 pips knock in EURCAD before the price reversed to our entry. We anticipated EURCAD may retrace lower, we are pleased it was only -65 pips at the time of this writing.

As this is a weekly entry there is nothing preventing EURCAD from re-testing the daily low’s but we hope such re-tests will not be seen. We are monitoring the markets and will update you on the latest developments. EURCAD is trading at 1.4462 at the time of this writing

15/04/16 UPDATE II: EURCAD is trading at 1.4530 at the time of this writing.

Please click on the chart to enlarge:

EURCAD Weekly Chart 15/04/16

EURCAD Weekly Chart 15/04/16

We are closing 10% of the long trade at market price prior to the Canadian Manufacturing data.

15/04/16 UPDATE III: EURCAD is trading at 1.4547 at the time of this writing.

Please click on the chart to enlarge:

EURCAD_Weekly_Chart_II_15_April_2016

We are closing 30% of the long trade at market price and shift the protective stop to the entry. This was an early weekly entry to capitalize over today’s gains.

15/04/16 UPDATE IV: EURCAD is trading at 1.4584 at the time of this writing.

Please click on the chart to enlarge:

EURCAD Weekly Chart III 15/04/16

EURCAD Weekly Chart III 15/04/16

Despite the profit we are somewhat disappointed as we were looking for stronger gains in today’s session.

We are closing 30% of the long trade at market price, stop shifted to 1.4490.

15/04/16 UPDATE V: EURCAD triggered the protective stop loss that was shifted above the entry, ending the trade with a fair profit.

The Euro, the PBOC and Our FX Technical Strategy

As EURCAD long trade is closed this page can now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
The Euro, the PBOC and Our FX Technical Strategy

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The Euro, the PBOC and Our FX Technical Strategy

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The Euro, the PBOC and Our FX Technical Strategy

Last Updated on April 19, 2016