Good morning traders.
Trust you all had a great weekend. On Friday I posted a long from S1 and when it hit I tweeted to take some off at around 10 to 15 pips positive as it didn’t look safe prior to US Retail Sales data. When the data came in on the whole stronger than expectations the pair started to sink and went all the way down to just above the 1.12 big fig.
The revisions that printed cant have helped the US rate cut lobby for this Wednesday and that is what we saw Friday. US Industrial Production was also a beat with upward revisions. Whichever way you look at the US data right now it looks in good health from an economic point of view. Whether Powell will bow to Trumps pressure for rate cuts, and there are some reasonable arguments for the Fed to perhaps take a small cut to insure against the trade war heating up, is now the big deal driving Forex.
We will have to wait until Weds. evening to find out.
Until then I think we can assume that we are not going to get much upside in the eurusd ( or further downside ). We do have Draghi speaking on Monday and Tuesday so that could trigger some movement but all eyes are on the FOMC.
With that in mind I doubt there will be much else to add until afterwards so I will probably wait until Wednesday and or Thursday for another briefing, unless we get some left field headlines that I think are worth noting and likely to give us any decent trading levels.
I’ve updated the performance chart here. As you can see this lack of volatility continues to weigh on our model returns. If there is nothing to trade we simply do nothing. Its even tough for our max strategy. Hopefully things will pick up soon. The key takeaway is that we don´t start going off piste. I do think we may need to adapt slightly if these conditions persist but we are still ´in the money´
The Daily Chart
As I write prior to the Sunday open the Daily doesn’t look that bullish to say the least. We are at the 1.12, roughly the 61.8 Fib of the swing and back at decent support in the middle of the range. Where it goes from here I don’t know, the Fed is the key factor.
The Hour Chart
I have noted some likely short term reaction levels where we can assume that there will be some fade bounces but how strong these are is not clear hence no model S1 or R1 levels. I will be scalping at these levels when and if they come up and that’s what I recommend until the FOMC.
Have a good day and hopefully Weds. evening will help us get a clearer handle on our beleaguered pair :).