The Weekly Update: Targeting GBPJPY and EURCAD

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Greece New Deadline

As Greece’s deadline is due on Thursday r negotiations with EU continued over the weekend in order to strike a deal that may prevent a financial crisis. From our research it appears the EU may agree the Greek terms in exchange for a referendum or general elections, which Alexis Tsipras (the current Greek Prime Minister) is refusing. As we have mentioned in our prior market research the Euro is likely to benefit either way as in a scenario where there is no deal capital control measures are likely to be imposed, which may lead to significant gains in EUR pairs and crosses in the Forex market.

After analysing the Euro against a basket of currencies it appears further gains are technically supported, however, we were unable to find a clean entry. Should we decide to enter at market price we risk encountering a bearish retracement, which means a substantial protective stop loss order must be exercised, which we are currently refusing to implement. The best entry appears to be in EURCAD but the required stop bearing in mind the volatility that is expected this week in the market is against our risk management.

Will Greece Exit the Euro?

We repeat these are not regular times due to Greece’s refusal to adopt the reforms that are demanded by its creditors, which may yield to Greece being forced out the Euro zone. On Thursday the Financial Ministers will also discuss the possibility of Greece exiting the euro zone, which mounts the pressure on Greece to strike a deal before the deadline. In our opinion Greece is unlikely to exit the Euro and all the ‘tough’ talk with Europe is to satisfy the Greek voters that brought Syriza to power.  If Greece will in fact exit the Euro and default on its debts, we have written in the past UK banks have a large exposure to Greece including other banks across the world. Should we sense the possibility of a ‘Grexit’ we will immediately focus on global indices and on the banking sector.

FX Trading Strategies

The uncertainty in the markets is reflected in our difficulty in discovering a clean, technical entry. We are likely to monitor USDJPY this week as a bullish retracement may provide a decent entry for a short position but certainly not at current levels.

Our strategy for this week is to combine multiple time frames and opt for an intraday stop despite the risk of doing so. Attempting to exercise an intraday stop form an entry that is derived from the weekly chart increases the odds of the protective stop being triggered by the market unless we were able to perfect the entry. We will list our trading strategies for GBPJPY and EURCAD but we highlight that it greatly depends on the opening price for these currency pairs.

EURCAD Technical Analysis

EURCAD is currently the only EUR currency pair that may allow a technical entry to join the expected uptrend.

EURCAD Daily Chart

Please click on the chart to enlarge:

EURCAD Daily Chart, 14/06/15

EURCAD Daily Chart, 14/06/15

The price closed above the neckline of the  reversed Head-And-Shoulders (H&S) and re-tested the breached neckline on Friday’s session. If you pay attention to the weekly chart there are warning signs a bearish retracement may be seen. In order to enter EURCAD a second re-test must be seen on the 4hr chart, which would allow us to enter the market and substantially reduce the required stop. Although the price should then break above the daily high that was noted on 4 June 2015, our target in such a scenario would be 1.4140. Should we have a technical entry you will be notified via email and the trade details will be posted on this page.

GBPJPY Technical Analysis

Although we are already exposed to GBP there are a number of fundamental elements that may support a weak GBP and a strong JPY.  Standard & Poor’s (S&P) credit rating agency revised the UK outlook to negative following the decision to hold a public referendum on exiting the EU by 2017. S&P actions may trigger a substantial amount of capital outside the UK, which may weaken GBP in the Forex market. In regards to the Japanese yen, the Bank of Japan (BOJ) comments that JPY weakness has reached its desired levels may allow the yen to recover against a basket of currencies although the impact is likely to be seen in medium-term.

GBPJPY Weekly Chart

Please click on the chart to enlarge:

GBPJPY Weekly Chart, 14/06/15

GBPJPY Weekly Chart, 14/06/15

The weekly chart indicates a trend reversal may occur by affirming a classic Japanese reversal pattern. Due to the market’s sensitivity to Greece and as the deadline is due on Thursday we wish to maintain a minimal exposure to GBPJPY. If the currency pair gaps lower and does not pare the losses we will be unable to enter the market as we expressed our desire for minimal market exposure. If however a minor gap is noted or in fact a gap higher it may allow us to short GBPJPY with a relatively tight stop. Please note that due to GBPJPY volatility in the Forex market a tight stop is likely to be between 80 to 120 pips although we cannot commit the stop will be at this range at the time of this writing.

Our target would be conservative, 186.75. If an entry will be provided the trade details will be sent to you via email and will shortly be posted on this page.

14/06/15 UPDATE:  Despite the recent recovery from the gap we are executing a long trade in EURCAD at market price (1.3820), protective stop layered at 1.3703, targeting 1.4140. As we are entering from a high price a retracement towards1.3763 is possible, which will not negate the bullish projection for EURCAD.

EURCAD 4hr Chart

Please click on the chart to enlarge:

EURCAD 4hr Chart, 14/06/15

EURCAD 4hr Chart, 14/06/15

(All our subscribers were notified with a minor delay, which actually provided a better price as EURCAD was trading at 1.3810 when the email was sent).

14/06/15 UPDATE II:  This is a fairy risky entry but we are executing a short trade in GBPJPY using an intraday stop. We are fully aware of the risk of doing so but the hourly resistance may prevent moderate gains the currency pair and we favour minimal market exposure.

GBPJPY 60 Minutes Chart

Please click on the chart to enlarge:

GBPJPY 60 Minutes Chart, 14/06/15

GBPJPY 60 Minutes Chart, 14/06/15

GBPJPY short at market price (191.85), protective stop layered at 192.64 targeting 186.75.

15/06/15 UPDATE: After we have been discussing capital control measures for the past month speculations capital control measures are being prepared for Greece led to moderate gains in EUR pairs and crosses.  We were hoping to see further gains in EURCAD but it appears this is all until the European session. If such measures will be implemented we will see moderate selling in global indices, which will favour our short trade in DJ30. We are closing 20% of EURCAD long trade at market price, 1.3892.

EURCAD 4hr Chart

Please click on the chart to enlarge:

EURCAD 4hr chart, 15 June 2015

EURCAD 4hr chart, 15 June 2015

Our short trade in GBPJPY triggered the protective stop loss order although we were in +40 pips profit (approx.). We were aware of the risk of an intraday stop and although we maintain our bearish outlook for the currency pair we are unlikely to re-enter at the time of this writing. The losses were soaked by our short trade in DJ30 and our long trade in EURCAD.

18/06/15 UPDATE: We are reducing our risk to EUR as irregular market volatility may be seen in the Forex market. Although we are anticipating moderate gains in EURCAD we must reduce our exposure. We are closing 20% of the long trade at market price, 1.3884.

18/06/15 UPDATE II: Moderate gains are noted in EURCAD, trading at 1.3941 at the time of this writing. We are shifting the protective stop to the entry and close 20% of the long trade at market price.

24/06/15 UPDATE: With a minor delay, EURCAD triggered the protective stop at the entry. We were able to realize a fair profit over the short trade.

The Weekly Update: Targeting GBPJPY and EURCAD

As GBPJPY and EURCAD trades are closed the analysis can  now be accessed by all traders. Open trades are restricted to members only. We have been proving trade alerts in the Forex market since May 2014.
The Weekly Update: Targeting GBPJPY and EURCAD

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The Weekly Update: Targeting GBPJPY and EURCAD

                                         The Weekly Update: Targeting GBPJPY and EURCAD
The Weekly Update: Targeting GBPJPY and EURCAD
                                             The Weekly Update: Targeting GBPJPY and EURCAD

The Weekly Update: Targeting GBPJPY and EURCAD