Eurodollar finally easing back
The Eurodollar has been in a strong positive trend for twenty years. If that surprises you, you're probably mixing up Eurodollar with EURUSD, which is something different altogether. The unfortunate naming of the 3-month dollar interest rate market tends to cause some confusion at times.
To put things into context, look at the long term chart below. It shows a very strong tendency for this market to move up, which really shouldn't surprise anyone.
The monthly view doesn't give you too much information on the latest developments, so we need to go down to daily to see the opportunity.
The daily chart shows the previous three signals given by the same logic as this trade idea. The idea is based on entering in the direction of the trend, in this case the long side, but only on a certain pullback.
Management and risk description
Buy into the December Eurodollar, GEZ5, on current levels. There are multiple liquid points for this market and for long term positions it often makes sense to trade further out, since that gives you a larger discount. For this trade idea however, we have a short enough time frame that it doesn't matter much.
Entry: Buy on current levels, around 99.49 USD.
Stop: Hard stop at 99.418 USD.
Target: Take profits at 99.634 USD
Time horizon: Around two weeks.
— Edited by Clemens Bomsdorf
Non-independent investment research disclaimer applies. Read more