The Weekly Update: 1.3900 is Definately Possible

EURUSD: 1.3900 is Possible

Following the Euro’s slide against a basket of currencies as the European Central Bank (ECB) fulfilled its promise to impose negative rates. By observing EURUSD daily chart it appears a moderate rebound may be seen.

Although it is rather early to come with such a bold statement but there is a great potential for Euro-Dollar to reach 1.3900 in the long-term.

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EURUSD daily chart

EURUSD Chart

It is rather confusing due to the negative rates but our technical models are turning bullish. We suggest to cut EUR market exposure and prepare for taking long trades in the pair. If your trading strategy provides you with a bullish entry we see no room for hesitation. We are also observing EURAUD and EURJPY for a moderate bullish correction.

1.3504 – Possible long entry following a retest
1.3560 – Possible long entry on a break above

Crude Oil: Time to Correct

Tension in Iraq, one of the world’s largest crude oil producers was the key drive for crude oil prices in the market. Nevertheless, the 4hr chart suggests the rally is due for a technical correction. A Japanese reversal pattern (Hanging Man) was painted on the 4hr chart whilst the technical indicators are deeply overbought.

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Crude oil chart

Crude oil 4hr chart

We cannot ignore the higher high’s and lower low’s, which are distinctive signs of an established uptrend. To simplify, we are looking for the price to initially correct lower before considering a ride on the bulls’ back. Recent spike in crude oil price as the markets opened from the weekend break provides us with a better entry for a short trade at the time of this writing, layering the protective stop order above 107.64. Traders that are intimidated by the current events in Iraq or prefer executing buy-on-dips strategies, we find 104.50 to be the key level. If the price re-tests 104.50 but is unable to post a daily-close below, this may be the perfect entry for long positions.

We have drawn for you the key levels in crude oil for this week based on our technical models:

104.50 – Buy-on-dips strategies, possible long
108.52 – Strong resistance, possible short

GBP and Mark Carney

In the Foreign Exchange market (Forex) GBP was the eye-catcher of many traders. Remarkets From the Bank of England (BOE) governor, Mark Carney that the central bank may raise rates sooner than the market expects played its magic on all GBP pairs and crosses.

GBPUSD gained +170 pips (approx.) as the market digested the BOE warning. However, we do not believe this the impact will last. The BOE members have already expressed their concern with the high exchange rate of the Sterling. Recent gains will only increase the tension, which is likely to be translated to BOE members talking the currency down. If you are heavily exposed to GBP do evaluate the possibility of partially liquidating your long trades.

Key Economic Figure

The key economic event for this week is on Thursday (19 June) as the  Swiss National Bank (SNB) is due to publish its monetary policy. There were many speculations in the past regarding the 1.200 floor in EURCHF. Pay great attention to the assessment and conference if you are already invested or planning to trade CHF against a basket of currencies.

We strongly suggest exercise a healthy risk management and avoid over-leveraged trades. DDMarkets.com is dedicated for both experienced and inexperienced traders.

18/06/14 UPDATE: Approximately one hour before the Fed monetary policy meeting,  crude oil (narrowly missing our bearish target at 105.36 as seen on the chart) and GBPUSD are trading lower but EURUSD is trading, as expected in our weekly market update.

19/06/14 UPDATE: EURUSD is trading at 1.3633 at the time of this writing while US crude oil has triggered our bearish target for the commodity (see crude oil chart).

25/06/14 UPDATE:  As we anticipated, the BOE reply to the high exchange rate of the Sterling did not fail to come and pushed GBPUSD off its high’s (1.7059), trading at 1.6970 at the time of this writing.

30/06/14 UPDATE: EURUSD is nearing 1.3700 at the time of this writing. We believe this is a decent level to book some profits over long trades and shifting the protective stop to the entry.

09/07/14 UPDATE: After being in a decent profit EURUSD posted a moderate correction. We have covered a renewed entry at the following weekly update.

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