EURUSD, symmetrical triangle, calm before the storm
Today despite the historic event in Singapore, with Trump and Kim signing the agreement for cooperation and denuclerisation. Sanctions remain so far for North Korea but it is a start. Market reaction has been muted so far, since we are waiting for FOMC interest rate decision and ECB as well in the coming days.
EURUSD formed a symmetrical triangle after executing a reverse H&S pattern, such price consolidation seems to be the investors for direction before major volatility kicks in. This happens often before ‘interest rate days’ and analysts also say it will be the most decisive week for major economies so far this year.
Fed rate hike almost fully priced in and little doubt of a hike tomorrow. Today's inflation data from US being positive. CPI inline with 0.2% and Core CPI exceeding forest by 0.1%.
ECB, while keeping rates unchanged, is expected to start lowering their stimulus in the face of improved EU economy that could be an early signal for investors of future rate hikes.
First major resistance is the high of the triangle, 38% fib retracement and 200 SMA.
Price action between the 50 and 200 SMA, which are converging towards each other, showing indecision and market waiting for direction.
Looking at GBPUSD, it is now also formed a pattern, falling channel, further signalling that investors are waiting.
Personally, I see a technical bullish continuation on the chart, but a lot will depend on the press conferences after the rate decisions. Powell and Draghi speaking will provide clues for future monetary policy for FOMC and ECB. Trump’s unresolved dispute over trade wars could still affect the fundamental market sentiment.
If, however, we see very dovish approach from ECB, EURUSD could go lower to retesting the major trend line.
Happy Trading!
EURUSD formed a symmetrical triangle after executing a reverse H&S pattern, such price consolidation seems to be the investors for direction before major volatility kicks in. This happens often before ‘interest rate days’ and analysts also say it will be the most decisive week for major economies so far this year.
Fed rate hike almost fully priced in and little doubt of a hike tomorrow. Today's inflation data from US being positive. CPI inline with 0.2% and Core CPI exceeding forest by 0.1%.
ECB, while keeping rates unchanged, is expected to start lowering their stimulus in the face of improved EU economy that could be an early signal for investors of future rate hikes.
First major resistance is the high of the triangle, 38% fib retracement and 200 SMA.
Price action between the 50 and 200 SMA, which are converging towards each other, showing indecision and market waiting for direction.
Looking at GBPUSD, it is now also formed a pattern, falling channel, further signalling that investors are waiting.
Personally, I see a technical bullish continuation on the chart, but a lot will depend on the press conferences after the rate decisions. Powell and Draghi speaking will provide clues for future monetary policy for FOMC and ECB. Trump’s unresolved dispute over trade wars could still affect the fundamental market sentiment.
If, however, we see very dovish approach from ECB, EURUSD could go lower to retesting the major trend line.
Happy Trading!
Comment:
Comment:
Despite a breakout on the downside and positive PPI data today from US, EURUSD went back within the triangle and dollar so far weakened, look for a retest of the upper trend line.
Comment:
Comment:
As expected, initial reaction to the hike was false and now EURUSD breaks out of the symmetrical triangle to start testing the resistance area.
Similarly, GBPUSD broke out of the falling channel on the upside.
Now all eyes on the ECB tonight. Rates are expected to remain unchanged but comments from Draghi regarding the start of lowering the QE should give a sign of future rate hikes, adding further strength to the euro.
Similarly, GBPUSD broke out of the falling channel on the upside.
Now all eyes on the ECB tonight. Rates are expected to remain unchanged but comments from Draghi regarding the start of lowering the QE should give a sign of future rate hikes, adding further strength to the euro.