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  1. #1
    Josesv is offline Banned
    Join Date
    Oct 2017

    Post EURUSD: correction complete

    On Monday the 30th of October, trading on the euro/dollar pair closed up. Euro bulls managed to restore the price to 1.1658, partially recovering the losses incurred by the ECB meeting and the strong US GDP data for the third quarter.

    The euro rose against a dollar losing ground on all fronts. This correction came about after it was revealed that some of Trump’s former aides are being investigated over alleged contact with Russian officials during the presidential campaign. The correction was also helped along by a drop in US bond yields. Anticipation of Wednesday’s Fed meeting and Trump’s announcement of his candidate for Fed Chair is adding to the sense of nervousness on the market.

    Day’s news (GMT+3):

    06:00 Japan: BoJ interest rate decision and monetary policy statement;
    08:00 Japan: housing starts (Sep), construction orders (Sep);
    09:30 Japan: BoJ press conference;
    09:30 France: GDP (Q3);
    10:45 France: CPI (Oct);
    13:00 Eurozone: CPI (Oct), GDP (Q3), unemployment rate (Sep);
    15:30 Canada: GDP (Aug), industrial product price (Sep);
    16:00 USA: S&P/Case-Shiller home price indices (Aug);
    16:45 USA: Chicago PMI (Oct);
    22:30 Canada: BoC governor Poloz’s speech.

    Fig 1. EURUSD rate on the hourly. Source: TradingView

    The news surrounding Trump and the drop in US bond yields changed the price’s direction during the US session. Instead of 1.1555, we saw 1.1655. The euro ran out of steam around the 67th degree at 1.1656. From there, the price dropped to 1.1625 (LB).

    An upwards channel has formed over the last 38 hours with a range of 45 pips. At the time of writing, the euro is trading at 1.1637. I’m expecting the price to exit this channel downwards somewhere between 14:00 and 16:00 today. Taking the upcoming Federal Reserve meeting into account, the correction could last until Thursday. Futures suggest that interest rates will be maintained at their current levels on the 1st of November.

    For the head and shoulders model to work out on the daily timeframe, the price shouldn’t stay above 1.16. In theory, we should head towards 1.1555 levels today or else the bearish impulse will start to fade.

    US 10Y bond yields have fallen to 2.36%, where there is a support, so a rebound is possible. The euro/dollar pair has corrected by 67 degrees. On the crosses, the euro is trading up against the Swiss franc and Aussie dollar, and down against the rest. I think that the correctional phase is at an end now. The conditions for a further drop have been fulfilled. What we need now is some activity from sellers and moderate trading volume.

  2. #2
    Josesv is offline Banned
    Join Date
    Oct 2017


    Sellers twice tried to break down the 90th degree on Tuesday, going against the market with the support of the crosses, but their efforts came to nothing. The dollar’s universal decline pushed the euro back up. The price is currently consolidating beneath the LB balance line at 1.1740. Traders are buying the euro against the Aussie dollar and selling against the other majors.

    Although yesterday’s intraday pricing model was slightly more in favour of buyers, my forecast hasn’t changed. The MA lines are looking downwards. I’m expecting to see a rebound from the LB and a decline for the euro against the dollar to 1.1674. I think this decline will still play out even if quotes rise again to the upper boundary of the A-A channel (1.1767) before dropping. Political uncertainty in Germany should restrict buyers as long as there aren’t any positive developments on this front.

    Today’s key event is the FOMC minutes. The US will celebrate Thanksgiving on Thursday. A lot of Americans will take Wednesday and Friday off as well, so trader activity is expected to decline as the week progresses. This means that volumes will be lower, which could lead to short-term surges in volatility.

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