Good morning traders.
Now that the dust has settled on the ECB and the FOMC the eurusd looks to be heading for higher pastures. Post the Draghi presser we dropped down to 1.1230 and smartly proceeded back up the chart. As mentioned at the start of the week there was always the chance that speculative shorts were too heavy and ran the risk of being trapped. This looks to be the case.
The ECB changed almost nothing from its earlier stance and maintained its dovish steady as she goes position. No further information was provided on TLTRO´s (targeted longer term refinancing operations) and Draghi reiterated that rates would remain unchanged at least until the end of this year. It won´t then be his decision as to what happens next.
The FOMC were similarly uneventful with nothing to really spook the market either way. Perhaps the most telling thing was that there appeared to be little discussion amongst members about loosening conditions ( dropping rates) and also that some members would consider raising should conditions dictate. So a balanced view but nothing to write home about.
The upshot is seems is that there is nothing to suggest any fundamental change in the positions of both central banks and the technical side can do its work for a while. My take on this is that we will see the eurusd head into 1.13 and up to 1.1350s to test higher resistance.
On the Brexit front we now look like we are off down the rabbit hole for another 6 months. The EU agreed to give PM May until October 31st to try and sort out the Gordian Knot that is Brexit. This will give the headline writers something more to play with as the date coincides with Halloween – Hallowexit anyone – remember you read it here first :).
On the data front we have US PPI at 2.30 CET and a slew of Fed speakers on the wires through the afternoon to be mindful of.
The 240m Chart
Taking the 4h chart for a change this morning we can see the long wick on the dip post Draghi and the push back up subsequently.
The upside targets are clear. 1.13 the big fig then 1.1320 to take initial stops. We then have the gap between 1.1320 and 1.1350 to the next level.
The Fibs on this leg are clearly adding confluence to our levels. Looking at the chart any dip back to 1.1250s should be supportive and the 1.13 level should get taken.
The Hour Chart
Levels as per.
As above any dip to the 1.1250s should provide a bounce but we could see a deeper push into the dip post Draghi. I don´t think we should push lower if the move up is to continue.
We also have the inverse head and shoulders pattern aiding the probabilities to the up side with the measured move of such targeting the 1.1320s (green vertical lines).
The technicals all suggest an up-move so that’s how we should play it. As ever, should this not get any traction, do what the chart tells you. The chart is always right for day trading.
Right that’s it for today and I will be off for a round of golf mid morning so take care of business for me and make sure you smash out some points (I know its pips but that word always sounds somehow childish to me lol ).
Back on the ´morrow dear reader.