Good morning traders.
No rate hike this month (as expected) and no change in language from the Fed post the midterms and after President Trump has made quite a few disparaging remarks about Fed policy. In a nutshell its business as usual with a continuation of gradual rate hikes through next year. Powell seems to be unfazed by any ´politics´ and is sticking to his anti inflationary view.
Consequently given that the ECB have stated that there will be no change in rates until after next summer, we will see a continued divergence in monetary policy between the EU and the US. At least until we get any changes in forward guidance from either of the two central banks.
Given this scenario the bigger picture points to a stronger USD versus the single currency and hence, a weaker eurusd.
I point this out not to suggest we simply get short the pair and hold on, but to paint the landscape that we are dealing with. We could easily get a rally in the eurusd as fundamentals can take a long time to come to fruition.
My style of trading as I´ve mentioned before takes into account the overall climate but I´m only really concerned with the short term.
After all as J M Keynes said ..”in the long term we are all dead…”!
So given the above – whats on the agenda for right now.
The Daily Chart
It looks like we are headed for another retest of the 1.13 key low at some point soon. Maybe not today as we might get some profit taking kicking in but the chart is pointing in that direction.
Below this level we have to look back more than a year to find any price action and structure to trade off. The levels are pretty clear below 1.13.
First stop on the daily is 1.12 and next up is 1.11. Not much by the way of intermediate levels. Following this level we take another step down to 1.10.
The key take away for me is that if we get some traction to the downside it could be pretty brutal and quick. Just something to bear in mind.
The Hourly Chart
For today the 1.1325s will be instrumental in holding off a retest of the big fig at 1.13. To the upside 1.1350, 1.1365s and 1.14s look like good possible short entries. I´ll be watching all three levels for entries on the lower time frame charts for intraday trades.
If you´ve been following my commentary and levels, thanks for your time and whatever happens don´t spoil your weekend.
Enter at the levels, never change your stops, and if the chance arises, take some money off the table at the same time as reducing your risk.
Have a good weekend and see you week.