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.
The current range on all pairs is getting annoying. Looking at the USD chart, something will need to happen soon…either bulls break upwards or bears take it down, finally. As you can see, bulls are not having much luck staying above 105. The same goes for EU, where bears have a hard time staying below 400 and for GU, where 2000 acts as a tough support, where price keeps bouncing from. So what now? Looks like we will have to wait for the week to unfold. Its really hard to make a prediction based on the current price action and chart setup. If I had to choose, I would say USD will go down…BUT…we are dangerously close to important support on both EU and GU. We had another bounce from there today, it was the first day of the month, last day of the week and the bounce started before London fix…that should mean something. But next week will need to confirm this…so watch out for next week’s weekly candle.
I just found some old prediction of mine from early 2020 and thought it will be interresting to compare with today’s chart. I didn’t hold this trade for 2 years, obviously, as I am not really a swing trader, for many reasons, but its fun to check, nonetheless.
This week we had a surprising FED meeting, with a rate hike bigger than expected. But thats not the surprising part…the surprising part is that the bankers and media, who leaked the information on monday, were actually right. Like it wasn’t enough the market has been acting crazy for the past few months, now we even have media and banks that aren’t lying? These are very weird and confusing times…I mean banks lying to us and giving false statements, was one of the things we could count on…and now this happens. But ok, now on a serious note. We might have seen a historic week…with the last push of the dollar bulls. On wednesday, Euro was super weak…it was hovering around 380 just 1-2 hours before the meeting, where FED was supposed to hike by 50 bps only. Euro was very near its long term support of 340…if that broke, hell would break loose. Now, if you are thinking just fundamentally, without knowing the market…you would think that a FED hike by 50 bps alone would be enough to take an already weak Euro down to 340, which was only 40 pips away shortly before the meeting and break it. And then FED came with a 75 bps hike! And YET, not only didn’t Euro break that level, it actually started going up. Which, for a trader who thinks both technically and fundamentally, made perfect sense. Long story short, all this hiking into 3-4% by FED is already priced in. Dollar bulls are already tired…they can’t go up until forever…you don’t make any profit until you close a winning trade…and once enough people close their trades, market turns around. And thats exactly what happened. And we might have seen what will come next, on thursday, when EU moved 220 pips up! Friday is mostly profit taking day and I didn’t expect bulls to make further progress, as the move on thursday was massive and they got tired by the end. But London fix on friday might have given us a clue that Dollar weakness is only starting. Those dollar bulls from the past few months will want to cash out eventually…and thats when Dollar might re-visit 101-102 on the USDx chart and possibly lower. Might be wrong, of course. 😉
My EURO and POUND targets for next week are shown on the charts below. We have FED on wednesday and BOE on thursday, but the first targets should be reached easily before then. Beyond that I don’t want to speculate, lets see where the price will be before FED on wednesday.
ECB meeting will be held on Thursday, June 9, next week! Right now, EU is hovering around 1.07…and can easily go either way, 300 pips up or 300 pips down, to strong demand and supply zones. It might be best to stay out until Thursday, when the situation becomes more clear.
This below is my theory into next week. But its just a theory…