As this is our first post would first like to thank Babypips for allowing us to provide our insights on the market in the forum. As opposed to standard market reviews or analysis we will focus on the future trend rather than reviewing historic price movements of a given instrument or focus our attention on market events that already took place.
The strategy, either technical or fundamental is designed for online traders. We may also provide some trading strategies for gold and crude oil (brent and nymex) but mainly focus on FX currency pairs and crosses.
Fed Rate Hike Impact
While this is less relevant to our trading strategies it is still an important to note. As you may already know, the Fed hiked rates in its last monetary policy meeting (as expected) with a possibility for another rate hike to take place this year.
The rate hike by the Fed will alter the market conditions in the market. These changes, particularly in the currency correlations are likely to affect numerous trading strategies. It is difficult to determine which type of technical strategies will be affected but the changes will take place within the next 14 days.
Expert Advisers or EA’s are likely to experience unusual volatility in their performance and begin to malfunction. The EA developer will require to adjust to the new market conditions, which may be a great struggle. Aside the Fed rate hike the brexit negotiations are set to commence on 19 June despite suggestions it they will be delayed due to the outcome of the UK elections. Theresa May is expected to partner with DUP and lead the negotiations. The brexit talks may therefore also disrupt the market conditions.
Our suggestion is to have multiple strategies at hand and adjust to the new market conditions when the changes take place.
EURUSD Intraday Strategy
EURUSD 4hr Chart
(as we are new we were not given the required permissions by babypips to upload images, we had to upload the chart to a different site and then link it here. We will contact babypips to resolve the issue).
We have been monitoring the above levels for some time. 1.1285 is they key resistance for EURUSD which has contained the pair on its several attempts to break higher. The recent re-test of 1.1285 which lead to current weakness was triggered by the Fed (rate hike).
EURUSD then breached its initial support level (upper blue line, now acting as resistance), which lead to further weakness to the latter support (lower blue line). The support has been tested and was able to prevent EURUSD from retracing lower.
We may witness a range between the support and resistance line (both in blue) until a breakout takes place.The targets for either breakout (bearish or bullish) are marked on the chart.
It is possible the price may attempt to re-test the support by the daily close, which if materializes suggests the current support may yield to corrective gains in the pair.
Although this may be irrelevant at the time of this writing, a break below 1.1078 (preferably a 4hr close) may pave the way for stronger weakness in EURUSD.