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UK Assets Alert
After finishing our first quarter with a decent profit and realizing over +50 pips in our first trade in August, we are continuing to focus on the FX markets. We would first like to cover the prior weekly update. We have realized modest profits over CADJPY and Natural Gas and we are still holding a long trade in EURSGD with approximately +60 pips at the time of this writing.
Before outlining our analysis for this week we would like to suggest extreme caution in UK investments. Although we have yet to conclude our research it is important to be aware the UK is preparing the ground to exit the EU. We are uncertain of the effects this will have on global markets, especially on UK assets so we are suggesting to adopt cautionary measures in long-term investments in the UK. We will study Boris Johnson report that is due to be released this Wednesday and add it to our market research.
EURNZD Technical Analysis
EURNZD weekly chart clearly suggest recent gains are merely corrective before a resumption of the established downtrend. Firm resistance at 1.5820 is expected to hold and prevent any heroic attempts to take the price higher, supported by the 21-Daily Moving Average (DMA) in grey.
EURNZD Weekly Chart
Please click on the chart to enlarge:
We cannot rule out another retest of 1.5820 but we willing to take the short trade at market price due to the positive interest we will gain over the position and fair Risk Ratio (RR, 1 : 2). Although the target should be set below 1.5405 we are setting a conservative take profit at 1.5565, layering our protective stop at 1.5880. What will determine the outcome of the trade is the employment data that is due on Tuesday night.
It is essential to highlight our technical models also indicate further gains in NZDCHF but we do not wish to remain overexposed to NZD in light of this week’s fundamental data.
At the time of this writing our technical models our on the verge of affirming a short trade in GBPJPY and a short trade in USDCHF. However, we must wait for further price developments before issuing trades in those pairs. When relevant we will issue the trades in our ‘Trade Alerts’ section.
Key Economic Figure
There are many crucial economic figures that are due this week. We believe the key focus will be on the Reserve Bank of Australia (RBA) monetary policy that is due in the early hours of Tuesday morning. The strong Aussie is beginning to tale its toll on the Australian economy, leaving room for a bearish surprise in the upcoming meeting.
04/08/14 UPDATE: EURNZD is trading at 1.5759 at the time of this writing. Although we are at an early stage of the weakness we are closing 10% of the short trade at market price.
04/08/14 UPDATE II: We are shifting the protective stop to the entry. EURNZD current price: 1.5740.
06/08/14 UPDATE: EURNZD was stopped out at the entry during yesterday’s session. We have ended the trade with a minor profit.
Trade alerts are also issued in the weekly update.