Catching the next swing down for EURUSD
EURUSD opened a touch weaker in Asian trading after an anti-euro party had success in a German regional election, a direct rebuff to Chancellor Angela Merkel.
However, it’s Thursday’s European Central Bank monetary policy review meeting that traders are now concentrating on.
Expectations are the staff forecasts will again show lower outlooks for growth and inflation but not enough to justify lower rates or an expansion of quantitative easing.
Meanwhile a couple of Federal Reserve members will be out on the speaking circuit after today’s holiday to guide markets as to how the Federal Open Market Committee as a whole may interpret last Friday’s employment report.
Tuesday’s ISM non-manufacturing survey will be the key data release.
Management and risk description
From both Elliott Wave and classical charting perspectives, the EUR is interpreted as having significant downside potential ahead.
Naturally this will require constant monitoring and technical re-evaluation to optimise trading opportunities, which I will be doing.
Today, resistance lies at 1.1180/1.1210, in preparation for the next leg of EUR’s decline below last week’s 1.1125 low – toward 1.1050, en route to 1.0980/1.0950 (see daily chart below).
Entry: EURUSD is seen as a sell today at 1.1180/1.1195.
Stop: 1.1241, initially.
Target: 50% at 1.0993.
Time horizon: Allow several days at least for initial target to be met.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)