The Weekly Update: Revamping the European Single Currency

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EURGBP Technical Analysis

Following an unusual week in the Foreign Exchange (Forex) market numerous currency pairs were held in a tight range.  We suspect the market waits for further clarity in December where the Fed and European Central Bank (ECB) will publish their monetary policies. The Fed hinted a rate hike may be seen in December while the ECB may slash the deposit rate and possibly expand the Quantitative Easing (QE) operations. General elections in Spain is also a key market event and we believe it has prevented the Fed and ECB from taking any actions.

We have emailed last week that aside noting a general US Dollar (USD) weakness we are also noting the potential for a strong Euro (EUR). After analysing the chart we have decided to take advantage of EURGBP weekly chart that may allow us to reload the long trade using the same EURGBP trading strategy we have employed on 4 November, 2015.

EURGBP Weekly Chart

Please click on the chart to enlarge:

EURGBP Weekly Chart 15/11/15

EURGBP Weekly Chart 15/11/15

As you may note from EURGBP weekly chart the potential for reversed Head-And-Shoulders (H&S) has not been invalidated by the market. It is early to determine whether the current support at 0.7030 will indeed hold and sustain the price. The protective stop we used on 4 November (0.6964) may be used again but if the price opens at significantly higher level we may consider a tighter stop. The optima scenario would be a bearish gap lower that will tighten the stop and increase the potential take profit.

EURGBP trade alert’s details will be sent via email after the opening of the Forex market at 22:00 GMT, which will then be updated in this page.

Commodities Insights: Gold

Gold has suffered from heavy losses in the market. We have identified a distinct bearish channel on the 4hr chart but  unfortunately it provides very little information in regards to the upcoming trend in the precious metal.  A break above 1,096.00 may suggest the price has negated from its bearish channel, creating room for corrective gains.

Commodities Insights: US Crude Oil

Crude oil downtrend has been affirmed on the daily chart. Joining the downtrend is a difficult task as corrective gains may take place. The key levels that may provide the required conditions for sell-on-dips strategies are 41.47 and 42.63. Either levels must be successfully tested on the 4hr chart to ensure the resistance is able to contain the gains should they indeed emerge.

EURGBP Trade Alert Details

Please click on the chart to enlarge:

EURGBP Weekly Chart II 15/11/15

EURGBP Weekly Chart II 15/11/15

EURGBP long at market price (0.7048)
Take profit: 0.7394
Protective stop: 0.6964
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 30 days

17/11/15 UPDATE: We have decided to opt for EURUSD long trade based on the weekly chart. We emphasize we are taking a risk by increasing our exposure to the Euro. We are using a tighter stop for the long trade.

Please click on the chart to enlarge:

EURUSD Daily Chart 17/11/15

EURUSD Daily Chart 17/11/15

Both trend lines (in black) are derived from the weekly chart. We are expecting the lower support to contain the weakness. The Fed and ECB minutes that are due later this week may be the key trigger for the long trade. We chose to layer the protective stop beneath 1.0570 as an intraday stop may will leave us exposed to intraday spikes.

EURUSD Trade Alert Details

EURUSD long at market price (1.0642)
Take profit: 1.0857
Protective stop: 1.0554
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 14 days

19/11/15 UPDATE:  EURUSD is trading at 1.0703 at the time of this writing.

Please click on the chart to enlarge:

EURUSD Daily Chart 19/11/15

EURUSD Daily Chart 19/11/15

We are closing 30% of the long trade at market price and shift the protective stop to the entry.

19/11/15 UPDATE II: EURUSD is trading at 1.0724 at the time of this writing.

Please click on the chart to enlarge:

EURUSD_Daily_Chart_II_19_November_2015

It was a tough decision but we have decided to close 10% of the long trade at market price, stop remains at the entry.

23/11/15 UPDATE: EURGBP is trading at 0.7029 at the time of this writing thanks to the morning star that was affirmed on the daily chart that forced the currency pair out of its range. Although the uptrend is expected to resume, the UK inflation hearings are due tomorrow at 10:00am GMT. We are closing 10% of the long trade at market price to maintain a healthy risk management. The 10% will be with a minor loss but we believe it is required.

25/11/15 UPDATE: A report published in Reuters suggests aggressive deposit rate cuts may be seen by the ECB in December, which took its toll on the Euro in the Forex market.  Traders are pricing in the probability for such actions by the ECB (as much as a -40bps deposit rate cut), which lead to moderate weakness in EURGBP including all EUR pairs and crosses.

From a technical angle we are dismissing these reports and we find it difficult to believe the ECB will take such drastic measures.  We will continue to monitor the markets but from a technical angle our EURGBP outlook has not been negated at the time of this writing.

25/11/15 UPDATE II: With a slight delay, EURUSD triggered the protective stop at the entry. We have sent many updates on EURUSD via emails.

02/12/15 UPDATE: EURGBP is trading at 0.7075 at the time of this writing.

Please click on the chart to enlarge:

EURGBP Weekly Chart 02/12/15

EURGBP Weekly Chart 02/12/15

We are closing 30% of the long trade at market price to reduce our exposure to the Euro.

02/12/15 UPDATE II: EURGBP is trading at 0.7096 at the time of this writing. Despite the fact the medium-term projection remains intact we cannot have such an exposure to the ECB monetary policy meeting. We are closing 10% of the long trade at market price and shift the protective stop to 0.7042.

03/12/15 UPDATE: The Financial Times reported there won’t be a rate cut, sending EUR higher before the official announcement. The ECB slashed the deposit rate by 10bps, stating further measures will be published. We may have missed the spike and we cannot determine whether gains will continue.

We are closing EURGBP long trade at market price, 0.7084 and put all the weight on EURUSD.

Following the ECB press conference, the Euro has enjoyed moderate gains against a basket of currencies including EURGBP. Please click on the chart to enlarge:

EURGBP Weekly Chart 03/12/15

EURGBP Weekly Chart 03/12/15

The Weekly Update: Revamping the European Single Currency
As EURGBP 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 Weekly Update: Revamping the European Single Currency

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The Weekly Update: Revamping the European Single Currency

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The Weekly Update: Revamping the European Single Currency

Last Updated on December 6, 2015