Good morning traders.
We had some action yesterday a little earlier than on Wednesday which gave us a push up into R1 and the chance to catch a short and model return of +26.
We are still waiting for information on the US China trade talks to give us guidance on the USD and hence the eurusd but it seems the tariffs will go ahead today on overnight reports of little to no progress. However, this is a fast moving issue in the sense that a headline can change the direction of markets in a heartbeat so we need to be mindful of what hits the decks today.
The reports I have read range from hopeful to decidedly pessimistic of a deal being reached in the short term. I guess anything could happen but two things stand out to me. The first is that Trump will want to do whatever he can to support stocks and keep them moving up as this will be a great election platform. The second is that China needs US dollars badly to pay for its increasing foreign debt.
So the impetus is to get a deal done. We will watch this space as the saying goes :).
Equities in the US recovered a little overnight and Asia markets were mixed but look set to continue down should we get a worsening picture of the negotiations.
For today we have some EZ industrial production data out early in the morning session. Later and more importantly we have US CPI at 14.30 CET.
The 240m Chart
We got the break out above the triangle we have been watching to take out the upside level we had at 1.1245 (the body top of the 4h candle).
A pullback to support around the 1.1214 mark then ensued and we are trading at around 1.1225 as I write. The HTF levels are the same as we have had all week and as we could go either way its a question of watching pa unfold and acting in a timely manner at decent points.
The Hour Chart
I have set S1 and R1 levels at the edges of the range for today as its not clear to me where we might be headed should we get a collapse in trade talks or indeed a surprise last minute deal.
Either way could shock the market out of its complacency so no point in risking model entries too close to current price. I’ve noted the scalp opportunity levels which offer decent places to catch 10 or so pips (or more dependent on how you manage your short term intraday trades).
We have had another positive week if somewhat quiet but we are positive and that’s what we are here for.
Have a good day and weekend and I’ll see you Monday.