Strategic trade
Trade view / 17 August 2016 at 14:46 GMT

EURUSD 1.12 to 1.15 is packed with resistance

Managing Partner / Spotlight Group
United Kingdom

A recent trade opinion I wrote on EURUSD that was not an actual open position for my book proved to me the difficulty of making near-term currency calls. On August 10, I was in favour of shorting EURUSD at 1.1187 and I had a theoretical stop at 1.1260.

That stop loss was filled and yet the currency pair appears to have entered something of a resistance minefield between 1.1200 and 1.1500.

These lie at: 1.1233 ... 1.1286 ... 1.1313 ... 1.1372 ... 1.1425 ... 1.1478.

The action today has seen euro slow its advance as dollar firmed up against the other major currencies on Wednesday. Investors looked ahead to the minutes of the Federal Reserve’s July meeting due for release later in the trading day.
Source: Spotlight Ideas

The time based technicals are mixed with the very short and very log both neutral and the middle areas marked as “Strong Buy” or “Buy”. 

I have always failed to grasp the strength of euro as it cannot be down to a trade surplus alone. Of the Eurozone’s trade balance of +€29.2 billion, 84.9% of that is down to Germany. Euro cannot stay strong on the back of Germany economic activity alone for ever.
The 10-year chart shows that if one can take the long term or strategic view then euro is stuck in a long running corrective channel and has now spent longer, languishing at the bottom of the channel than at any other time in the past decade. 

Some may say a strong bounce is called for...but I have to challenge that assertion given the fact that the European Central Bank will keep rates low for at least two more years whereas the Fed are on the road of tightening. Of course such action or in the ECB’s case accommodation are well signalled, however, I cannot see any merit, other than short-term speculation to be long euro.

EURUSD 10-Year Chart:
Source: Spotlight Ideas

Management and risk:

Parameters: EURUSD

Entry: Sell 1.1273 14:29 GMT.

Targets: 1.1000 ... 1.0500 ... 0.9975

Stop: 1.1590

Time horizon: strategic trade

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
17 August
sam wightman sam wightman
Following the EUR/USD strategy , what happen this afternoon to send it high ?
18 August
Cap21 Cap21
i have sold according to you sir,but going high
19 August
vanita vanita
Dear cap21,
Steve is only sharing his view please trade at own risks.
Steve just guide so that we not attend in wrong trade but some times he also may be wrong so please don't say you have sell according to sir .
As market is unpreditable .

19 August
vanita vanita
Have patience eurusd will go downside just high because of fed minutes.


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