The Weekly Update: EURUSD and the Upcoming Turkish Elections

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Emphasizing EURUSD Risk

We continue to emphasize the risk of capital control measures being imposed on Greece that are likely to lead to significant gains in EURUSD. Our attempt to capitalize over Euro-Dollar was unsuccessful and we are unlikely to re-attempt to long the pair unless it can be technically supported. Should market speculations indicate such measures will be imposed this week it will be too late to enter the pair without taking a moderate risk, which we do not desire. On the bright side, such measures are likely to trigger moderate buying in Gold (XAU/USD) and weaken the US Dollar against a basket of currencies.

Many traders are under the impression that the Euro will be heavily sold if Greece defaults. The capital control measures, should they be imposed, are likely to take place before the official announcement that Greece had defaulted on its debts. We believe that many EURUSD traders based their trades on Greece are in for a ‘bullish’ surprise.

CADJPY posted a moderate recovery despite the Canadian Gross Domestic Product (GDP) on Friday. We are uncomfortable with the tight range CADJPY is held, however, this was a monthly entry and we knew in advance it may take some time for the downtrend to emerge, which is why the estimated duration for the trade was 90 days.

USDTRY Technical Analysis

As we have multiple trades that are currently open in the market we are choosing to focus on one currency, the Turkish Lira (TRY). The Turkish Lira is attractive to many carry traders due to the high interest rate, +7.5%.  On Sunday, 7 June 2015 general elections are scheduled to take place in Turkey. The outcome of general elections is likely to have a significant impact on TRY crosses in the Forex market. As we are anticipating a weak US Dollar (USD) this week, we are focusing on USDTRY.

USDTRY Weekly Chart

Please click on the chart to enlarge:

USDTRY Weekly Chart, 31/05/15

USDTRY Weekly Chart, 31/05/15

This is a daily entry but we chose to display the weekly chart as the reversal pattern is quite clear. We note the formation of the right-hand shoulder of the top H&S, neckline at 2.5565, support via the 21 Daily Moving Average (DMA) in pink. The resistance (blue line) is expected to contain the bulls from driving the price higher, which may yield to a re-test of the neckline and possibly a firm break below that may trigger moderate selling in USDTRY. If you have never traded USDTRY before, the current daily Average True Range (ATR) is approximately +320 pips, which indicates how volatile the currency pair is.

The required protective stop loss order is more than likely to exceed 200 pips while the target exceeds 2,000 pips. It is essential to note that the pip’s value in USDTRY is relatively low. As it is not a popular currency pair please note the following:

Trade Size: 0.1 lots or 10,000 units

USDTRY rate:  2.6624

10,000 x 0.0001 = 1 TRY

1 / 2.6624 = 0.38 or 38 cents per pip.

We provided a guide on calculating pips in the Forex market should like to understand why the following calculation was made to derive the pip’s value of USDTRY for a trade size of 0.1 lots or 10,000 units. Also confirm the margin requirement for USDTRY with your broker.

We are uncertain whether to derive the protective stop loss order from the daily chart or use the 4hr chart, which will substantially reduce the stop loss order size but due to the volatile nature of USDTRY we could easily get knocked out the market before the price reverses lower. We would only be able to make this decision after the opening of the Forex market.

USDTRY Trade Alert Details

Entry: market price (2.6587)
Take profit:  2.4165
Protective stop: 2.7015
Risk Ratio (RR): 1 : 5.7 (approx.)
Estimate duration:  10 days

Unlike other trades, if we are able to shift the protective stop to the entry after gaining a sufficient distance from the market we will enjoy positive interest at the rollover.

04/06/15 UPDATE: USDTRY triggered the protective stop loss order following the rally in EURTRY, which was triggered by a strong Euro. This is one of the scenarios that we choose to re-enter but this time in EURTRY as we note the potential for a double top formation on the daily chart.

EURTRY Daily Chart

Please click on the chart to enlarge:

EURTRY Daily Chart. 04/06/15

EURTRY Daily Chart. 04/06/15

We are executing a short trade in EURJPY at market price, protective stop layered at 3.1047, targeting 2.8970.

04/06/15 UPDATE II: Heavy selling was noted in EURTRY, driving the price to at the time of this writing.

EURTRY Daily Chart

Please click on the chart to enlarge:

EURTRY Current Daily Chart, 04/06/15

EURTRY Current Daily Chart, 04/06/15

We are closing 10% of the short trade at market price.

04/06/15 UPDATE III: EURTRY losses continue, ensuring a swift recovery to our losses in USDTRY.

EURTRY Daily Chart

Please click on the chart to enlarge:

EURTRY Daily Chart, 4 June 2015

EURTRY Daily Chart, 4 June 2015

We are closing 10% of the short trade at market price (3.0259).

04/06/15 UPDATE IV: EURTRY is trading at 3.0180 at the time of this writing. We are closing 10% of the short trade at market price.

04/06/15 UPDATE V: EURTRY is trading at  3.0048 at the time of this writing. We are closing 10% of the short trade at market price and shift the protective stop to the entry.

04/06/15 UPDATE VI: EURTRY is trading at 2.9903 at the time of this writing. Greece request to bundle the payments is  having a bearish effect on EUR pairs and crosses. We are closing 10% of the short trade at market price. The protective stop remains at the entry.

05/06/15 UPDATE: EURTRY is trading at 2.9720. We are closing 20% of the short trade at market price.

05/06/15 UPDATE II: The protective stop and take profit orders will be meaningless as a gap is expected on Sunday night following the Turkish elections.

EURTRY Daily Chart 5 June 2015

Please click on the chart to enlarge:

EURTRY Daily Chart, 05/06/15

EURTRY Daily Chart, 05/06/15

Due to the recent weakness in EURTRY we have liquidated a vast majority of the trade with a decent profit. We are going to leave 10% of the short trade in the market the heavy selling leave room for a possible technical correction. The gap is likely to range between 800 – 1,000 pips. We are closing 20% of the trade at market price, 2.9639.

The Weekly Update: EURUSD and the Upcoming Turkish Elections

As EURTRY trade is in a hefty profit we have decided the trade alert can  now be accessed by all traders. Open trades are restricted to members only. We have been proving trade alerts in the spot Forex market since May 2014. Sign up for one of our plans and review our documented trades performance.
The Weekly Update: EURUSD and the Upcoming Turkish Elections

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The Weekly Update: EURUSD and the Upcoming Turkish Elections

                                         The Weekly Update: EURUSD and the Upcoming Turkish Elections
The Weekly Update: EURUSD and the Upcoming Turkish Elections
                                             The Weekly Update: EURUSD and the Upcoming Turkish Elections

The Weekly Update: EURUSD and the Upcoming Turkish Elections

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The Weekly Update: EURUSD and the Upcoming Turkish Elections