There is really no point to write an analysis, as EU hasn’t been following any technical or fundamental rules in the past few weeks. So its just another week to wait for some correction/profit taking. Whoever is buying is not making any profit, until those trades are closed, anyway. UCHF is printing some good bottoming patterns now, so that could help EU bears in the process.
Euro and the pound have been very resilient to fundamentals in the past 3 weeks. It is very surprising that the big dollar dump didn’t have any correction yet, no profit taking. Looking at Europe, its a dumpster fire, inflation highest ever, companies struggling with the chinese lockdowns, since most need China for various products and economies beyond repair. And yet, Euro kept going up with barely any corrections…kind of like a pump before a dump situation. And now on friday, US inflation printed green numbers, which again didn’t help the Dollar much. Something is cooking underneath…and I think shit is going to hit the fan soon. Next week might be perfect for it, as volatility will be highest in a long time…inflation on tuesday, FED on wednesday, ECB and BOE on thursday and big manufacturing/services news from Europe on friday. If someone wanted to book profit, it would be a week like this. I think we will see 1.03 on EU again…possibly lower. Might be wrong, of course. 🙂
Thats why I won’t make any predictions into next week, other than for my members. I have an idea, but need to figure out what the market wants first. All active members will get my next week analysis today.
This week was very interresting. Mainly FED on wednesday and then BoE on thursday, when GU was being dumped the minute Frankfurt opened and London kept going, without any retrace. The BoE meeting then gave it the final hit. As scary as it looked for bulls, friday turned everything around. US news were positive, NON-FARM higher than expected and yet, USD was being sold heavily, which mainly EU used for a big bull run into FED’s highs from wednesday. GU couldn’t make it above 1400, but what didn’t happen on friday, might easily happen next week. From the look at the USD chart, bulls look pretty much done…I expect some climb up from them early next week, but then bears should take over. Since EU is more bullish than GU, for whatever reason, I prefer to wait for good long opportunities next week. Closing price was around 9960, so lets see how deep we can go from there. I would wait for monday’s action first…if indeed bears start with a downmove towards 9900 or below. When they do, I will start looking into long opportunities and targeting numbers above parity.
Next week will be without any big events, so USD might take a little break, which agrees with the technical side, too. When looking at USDCHF, it is at a very strong resistance and EURUSD did some hard bottoming around 0.97 this week. I would target about 200-250 pips and see how the chart looks after that. The week after next week is the ECB meeting, which will be more interresting, I suppose. 😉
Next few trades will be for members only. Stay safe, everyone!
I might be crazy, but I still think its a good idea to buy the EURO dips below parity. The bottoming keeps going on and the only thing that took it back below parity on friday was news about Nord stream maintenance. Market kind of blew the whole thing out of proportion with an almost 90 pips drop, but for me its just another good buying opportunity. Its currently scalpers heaven, you get in and get out for 50-100 pips and keep repeating. Next week we have an ECB meeting on thursday where a 75bps hike is expected and I also expect the Nord stream issue to be fixed soon, so all that should help euro to climb up a bit again. What is helping the cause is a strong topping on USDCHF chart, strong bottom of 1.15 on the GBPUSD chart and also overall topping on the USD basket chart. Or I might be completely wrong…we will see what the market does next week.
Euro bulls are having trouble to stay above 250 and I don’t expect them to break up towards 300 early next week either, even though they could always surprise me. I expect them to reach 500, but I think its safer to wait for a re-test of parity first or for a clean break above 250. So for me the week will start in waiting mode. If we start with a downmove…I will wait for when it stops, if at the 100 level again or if it breaks below, towards parity or lower. We have big events by the end of the week, BoE monetary meeting on thursday and big US news on friday. Until then the market will get into positions…so the safest bet is to wait until then, so you don’t get trapped into a bad trade early.
EU was hovering around 1.0200 for most of this week. Bulls were failing above 250 and bears were failing below 150, so the range was pretty tight and great for scalpers. That will most likely change next week as we have a FED meeting on wednesday and a 75 bps hike is expected. That is pretty much already priced in. What wasn’t priced in was the ECB hike this week…where the market expected a 25 bps hike and ECB surprised with a 50 bps one! BUT euro bulls were so tired by that time, they couldn’t manage to stay above 250. The daily chart is a problem for the bulls, and the H4 chart looks “overbought”, too. So I wouldn’t be surprised if we broke below 150 next week…and re-tested parity before or during FED. If that happened, the parity area might give us another good opportunity to go long. Because even though FED will most likely hike by 75 bps…imagine what would happen if they only did a 50 bps hike. And it can easily happen, with the current bad economic numbers. But its a FED week…the best and safest way to make money is to stay away from trading until wednesday. And by then the chart will be clear and it will be an easier choice if to go long or short on euro, because right now at 200, we can go 150-200 pips up and down and both moves would make sense.
Something really did break this week, but it wasn’t the dollar, it was the euro. And below 340, which was a barrier for more than 2 decades, there was no support for bulls. It was a one-way street until friday, when London did a final bearish dump, only to find some buyers below 100. I wouldn’t sell this at these levels…first I would like to see a re-test of the longterm support at 340, or even 340-400. If the market can go up there and fails to hold above, bears should take over again and re-test the lows. If that area breaks to the upside and keeps holding as support again, 550-600 will be my bullish target. The bullish divergence on daily chart, along with the buyers below 100, give EU some hope for a bullish run next week. We have no big events planned, but the week after that is ECB and the week after that is FED. So next week should be more technical, without any more shocks, hopefully.