Good morning traders.
I trust you all had a great weekend and are raring to go. I usually cant wait for the markets to open! How many other jobs do you know where the majority of ´workers´ (certainly the guys I know) love it when Monday (and Sunday night) comes around. All that opportunity just sitting there waiting to be taken. Are you up for it?
In terms of a bigger picture read, the first thing to note is that the EU has agreed the Brexit terms.
Whether this will have any significant impact on the eurusd remains to be seen. Remember, the UK government now has the tricky (some might say impossible) task of getting the deal passed by Parliament. The result of this is still 15 days away so I expect continued uncertainty to be the order of the day on this front.
In terms of other macro drivers, Italy is still causing a stir, EU data has been disappointing of late and of course we have the other side of the story vis a vis the USD which a few analysts are suggesting is setting up for a correction of sorts.
This, if it does happen, will propel our pair much higher but it depends largely on equities, bond prices and overall risk on/risk off sentiment. I´ll add a bit more colour regarding the USD specifically as we go through the week.
So what’s in the tea leaves for today?
The Daily Chart
As I mentioned last week any dip down to 1.13 will be carefully watched by traders for any reversal back up the charts from the inverse head and shoulders pattern that would be formed. So watch out for this to unfold and if it does look like materializing, drill down to the lower time frame charts to look for a good entry. By the way it could just move up from Fridays close and it would still be a valid H&S pattern in my book.
If we break below 1.13 and close below on the daily I´d guess we are more likely to get another test at 1.12 and perhaps the 1.1180 61.8% Fib level.
Keep a close eye down here as there could be a good long term trade to be had. I´ll keep you posted.
The Hourly Chart
The 1.13 to 1.1325 area has a lot going on. We have the 61.8% Fib of the last 2 weeks high and low, the Monthly open level, Fridays close and the 1.13 big fig itself. That´s a fair bit of confluence at support so its likely to be a good indicator of direction if we get a clean move up or a clean break through to the downside. If it does break through at some point this week I suspect we will be in for a test lower down the charts.
Technical level support and resistance are noted for today’s intraday trades.
Ok that´s it for now.
Buckle up and get ready to take your shots.