The Weekly Update: The Euro, the Yen and the Aussie

As we updated all our subscribers towards the end of last week we will be focusing on the Australian Dollar in the Foreign Exchange (Forex) market. The Consumer Price Index (CPI) that is due later this week will have a significant impact on the Reserve Bank of Australia (RBA) decision to adopt further easing measures in the upcoming monetary policy meeting. We do have some concerns on initiating a trade in AUD due to the economic data that is due on Monday and Tuesday, which may not necessarily be inline with our projections.

EURAUD Daily Chart

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EURAUD Daily Chart 23/10/16

EURAUD Daily Chart 23/10/16

The entry was already given in EURAUD. As we anticipated a weak Euro in the market we were under the impression EURAUD will not retrace higher, which was not the case on Friday. Initiating a long trade at current levels means we must anticipate a re-test of 1.4195 even if it does not take place. Such re-tests as we expressed in the past are not guaranteed but must be anticipated. We will have to wait for the opening price of Euro Aussie in order to determine how we wish to proceed. We do have a potential intraday entry in GBPAUD.

GBPAUD 4hr Chart

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GBPAUD 4hr Chart 23/10/16

GBPAUD 4hr Chart 23/10/16

What is required is a break above the neckline (in pink) in order to affirm the intraday uptrend in GBPAUD, which may also decrease the possibility for corrective weakness in EURAUD as we elaborated on earlier. The risks of trading the Aussie at the opening of the market is the economic data that is due from Europe and the UK until Australia’s CPI is published. FOMC Dudely, Bullhard and Powell are likely to stir some confusion on a potential rate hike by the Fed. Mario Draghi and Mark Carney speeches on Tuesday prior to AU CPI may also trigger some volatility in the market.

To summarize, by opting for either trade it means AUD may not necessarily come into play until the CPI is released and we would just be looking for a strong EUR and GBP. Once the market opens (21:00 GMT) we will decide whether we wish to opt for either AUD trade today or wait until Tuesday’s close.\

EURJPY Trading Strategy

As opposed to Euro Aussie, an intraday entry is available in Euro yen. We should highlight it is difficult to determine whether the Euro is due to correct higher or whether we may witness a weak AUD and a weak JPY. It does seem EUR is due to retrace higher but it lacks a concrete confirmation from the charts.

EURJPY 4hr Chart

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EURJPY 4hr Chart 23/10/16

EURJPY 4hr Chart 23/10/16

Similar to EURAUD, the entry was already given on Friday. We hope for a lower opening in EURJPY that will enhance the risk reward ratio of the long trade.

We will issue an update after the opening of the Forex market.

EURAUD Trade Alert

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EURAUD Daily Chart 23/10/16

EURAUD Daily Chart II 23/10/16

EURAUD long at market price (1.4304)
Take profit: 1.4530
Protective stop: 1.4185
Risk Ratio (RR): 1 : 2 (approx.)
Estimated duration: 5 days

Note: As explained in the strategy, the price may re-test Friday’s lows. We cannot determine whether such a re-test will take place but decided to opt for the long trade nevertheless.

EURJPY Trade Alert

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EURJPY 4hr Chart II 23/10/16

EURJPY 4hr Chart II 23/10/16

EURJPY long at market price (112.95)
Take profit: 114.10
Protective stop: 112.38
Risk Ratio (RR): 1 : 2.2 (approx.)
Estimated duration: 4 days

Note: Similar to EURAUD, we cannot determine whether there will be a re-test of Friday’s lows but opt for the trade. As opposed to EURAUD this is an intraday entry.

24/10/16 UPDATE: EURJPY is trading 113.47 at the time of this writing.

Please click on the chart to enlarge:

EURJPY 4hr Chart 24/10/16

EURJPY 4hr Chart 24/10/16

We are closing 50% of the long trade at market price and shift the protective stop to 113.05.

USDCHF Trade Alert

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USDCHF 4hr Chart 24/10/16

USDCHF 4hr Chart 24/10/16

USDCHF long at market price (0.9933)
Take profit: 1.0030
Protective stop: 0.9902
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 7 days

Note: We are taking a small risk as the price could re-test 0.9910. There is no guarantee such a re-test will take place.

24/10/16 UPDATE: As EURNZD was able to retain its gains as opposed to EURAUD, we are anticipating a limited drawdown in Euro Aussie. It is not guaranteed to take place but it must be anticipated.

We are closing 10% of the long trade (EURAUD) at market price (1.4297). This is a risk management maneuver.

25/10/16 UPDATE: We did see the possibility for a limited drawdown in EURAUD as we updated yesterday. We must assume 1.4195 will be tested even if it does not take place. As we are aware the spread could widen at 21:00 GMT we are shifting the protective stop to 1.4174. On rare occasions we widen stops as we prefer exiting the market with the predetermined loss and focus on the next trade. We have little choice in EURAUD.

25/10/16 UPDATE II: In light of recent events (USDCHF spike to 1.000 and sharp reversal) we are raising the protective stop to 0.9917 in USDCHF.

26/10/16 UPDATE: 1.4195 was tested, however, it is was in the form of a spike due to the CPI.

Please click on the chart to enlarge:

EURAUD Daily Chart 26/10/16

EURAUD Daily Chart 26/10/16

The spike triggered the protective stop, ending the trade with  loss. On rare occasions we re-enter trades that were stopped out even due to a spike. We chose not to re-enter EURAUD. USDCHF triggered the protective stop, ending the trade with a minor loss as the stop was raised to narrow the exposure.

26/10/16 UPDATE II: We decided to close EURJPY at market price (113.88) after the 4hr close was at the intraday resistance at 114.00.

Please click on the chart to enlarge:

EURJPY 4hr Chart 26/10/16

EURJPY 4hr Chart 26/10/16

We were comfortable closing the trade as it was within a near proximity to the take profit.

GBPCAD Trading Strategy

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GBPCAD Weekly Chart 26/10/16

GBPCAD Weekly Chart 26/10/16

We have noted a reversal pattern in GBPCAD weekly chart. The bearish spike that is seen on the chart as a result of remarks from UK Chancellor triggered the entry. We were fairly concerned in initiating a trade in GBP but we suspect this may be as a result of a weak Canadian Dollar (CAD) and a neutral GBP.

GBPCAD Trade Alert

Please click on the chart to enlarge:

GBPCAD 4hr Chart 26/10/16

GBPCAD 4hr Chart 26/10/16

GBPCAD long at market price (1.6377)
Take profit: 1.6865
Protective stop: 1.6235
Risk Ratio (RR): 1 : 3.3 (approx.)
Estimated duration: 15 days

Note: The last kick higher increases the possibility of a re-testing the breached resistance at 1.6350. It is a weekly entry that is timed via the 4hr chart. We are using a tighter stop based on the 4hr chart as the weekly chart demands a +700 pips stop.

27/10/16 UPDATE: As opposed to other GBP crosses that are traded against the commodity currencies (AUD and NZD), GBPCAD is failing to correct higher. The gains that ere noted in GBPAUD and GBPNZD were hardly reflected in GBPCAD.

This is an unhealthy indication that we may note further weakness in the cross. As opposed to EURAUD we are letting the trade float for the time being. If we note GBPCAD is still failing to rise in tandem with GBPAUD and GBPNZD we will consider liquidating partials.

28/10/16 UPDATE: GBPCAD triggered the protective stop on what appears to be a spike at the time of this writing on the 4hr chart as it was a 4hr entry. We are not re-entering the trade. The spike was triggered by Northern Ireland’s court decision on the brexit:

Northern Ireland High Court Decision

The Weekly Update: The Euro, the Yen and the Aussie

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
The Weekly Update: The Euro, the Yen and the Aussie

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The Weekly Update: The Euro, the Yen and the Aussie

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The Weekly Update: The Euro, the Yen and the Aussie