Good morning traders. Hope you had a good weekend and are raring to go :).
The take out from last weeks price action for me was that the euro looks to be highly reluctant to want higher prices vs the USD. It made an effort on Wednesday evening to push up on a dovish Fed, took out 1.14 (this years range high point) and had a half-hearted bash at pushing 1.15 but ran out of steam below 1.1450. We eventually made 1.1448 and retreated somewhat hurriedly from there on.
For now the Daily range or the comfort zone if you like for the eurusd is between 1.13 and 1.1465 indicated by the thick navy lines on the below chart with the top being help firmly by the 200 DMA. Both attempts at breaking out either higher or lower have failed since January. The trend lines we were watching helped us gauge a move up last week as we were anticipating and they will continue to play a part in moving forward.
The Macro Picture
I´m not sure what from a macro pov is going to significantly change things in the short term. Both the Fed and the ECB are in dove mode but the PMI´s out last Friday for the eurozone suggest the euro remains the relatively weaker partner. So for now we are at best looking at further range trading with a neutral or bearish bias as we could be starting to carve out a slightly lower range with 1.12 becoming more important at support.
As we have discussed before, maybe Brexit and some resolution either way will help us move out of the range and maybe the US china trade talks will help but it looks like Brexit could go on forever at the moment which will continue to drag on the pair.
These US trade talks with China are not making much progress either it seems for that matter. We do have a change at the helm of the ECB coming up later in the year in October when Draghi steps down but that´s still some way off in terms of getting a reaction for the euro.
The upshot is I´m not sure what is going to unlock the eurusd so until something becomes clear we have to resign ourselves to trading the range.
Again as we have covered in numerous posts this is no problem for us. Indeed at least we have a view of what is likely to happen which will help us set levels and S & R zones to trade off.
For the week ahead we have little of real importance on the data slate barring headlines on Brexit (don´t you wish we could just get a deal over the line!), Draghi speaking on Wednesday and US final GDP figures on Thursday. Today we have German IFO data at 10.00 CET.
From a model performance perspective we had a pretty uneventful week posting just +7. Click here for updated results. By the way the week 2 performance is at 0 due to the fact that I was away from the end of the previous week and for the whole of week 2 and therefore counted no trades.
The Hour Chart
Levels and zones for today.
Watch out for how we react to the 1.13 Big Fig as we kick off the week. Pushing above, retesting and holding may mean that we only have a scalp fade opportunity (+10, stops -10 ) rather than our normal model targets from R1. R2 is a stronger resistance as we have clear stops residing above it. Whichever way we decide to go these levels and zones are the best places to look for trades whether just for scalps or for higher returns. Also don´t forget that support turns to resistance in strong moves.
Have a good day and lets make sure we get some money under the belt to start to the week.