Good morning traders.
Another R1 short in the bag from yesterday – and this time with no need for any Brexit news based assistance. R1 again triggered a short from 1.1180. I tweeted to take care not to let it turn into a loser once it got to +15 as we had the FOMC minutes later but in the event it went onto score a full +26 model result. Whatever way you traded it you should have had another winner.
There was lots of speculation about the future of UK PM May yesterday which cast more uncertainty on the Gbp and hence the euro but the FOMC minutes were the headliners for the day. In the end they didn’t tell us much that we didn’t already know. The only out take of note in my opinion was that there was no mention of rate cuts anywhere to be seen so perhaps not as dovish as some may have been looking for. Hence we did get a drift lower in the eurusd overnight.
The big issue remains the trade war tensions which are building between the US and China. There doesn’t look to be any amicable solution in close sight and this is dampening equities across the board. Nothing spectacular just yet in the form of any deep correction but volumes are very low indicating there is little conviction in the markets either way. At times like this a suitable catalyst is all that is needed to trigger a rip or a dip which could catch hold very quickly.
On this note of volume the eurusd is undergoing a period of extremely low ATR (Average True Range) an indicator of how much movement we can expect in a days trading. Right now we are at 36 ATR for the daily chart. Such a low figure makes for very poor speculative trading. It is also tough to scalp this market as price action on the lower time frames is unreadable – almost. We have done exceptionally well so far with our model strategy levels but the level of movement means we only get very few trades.
Due to this low activity if I don’t see anything of any note on the charts I am not going to write up a daily briefing. For the time being and while these conditions last I will publish only when something is really clear to me. Of course should activity pick up I´ll get back to writing each day but its increasingly the same levels I am suggesting day in day out.
We have German and French flash manufacturing data out this morning.
The Daily Chart
As above there is really nothing more to say about the daily chart than what we have been discussing for the past couple of months. The downside looks attractive and there are clear levels to take on the way down. Similarly the levels are clear on the way up. Other than that all I can add is to watch the structure and trade at the points which make sense.
The Hour Chart
Levels as per.
R1 stays the same as all week as does S1. Be aware of this lack of movement and consider taking partial profits when you have 15 or so in the bank as that is roughly 50% of the daily ATR!
Have a good day and if there is anything useful to add for tomorrow I will do so. If not I´ll see you next week.