Forex trading in the past week impacted a lot of events from political news to monetary policy and economic data flowing out from different countries around the world.
The Euro ended up being the top gainer at the end of the week (just I pointed out in prior weeks that there is something coming up for the Euro).
The currency gained against all major pairs, including the U.S Dollar which had 90% probability of a 25 basis points rate hike priced in as a result of forward guidance by Feds chairperson Janet Yellen and Economic data that beats expectations.
Despite that, the Euro outperformed the greenback because of the monetary policy meeting held by the European Central Bank (ECB) on Thursday at the end of which no changes were announced in Quantitative Easing and interest rate, due to political risks in the Eurozone.
Although, recent emerging economic data suggests that the zone is out of deflation and investor confidence is gradually being restored. The ECB chose to sit on the fence until the political uncertainty is over.
As for this new week, the market has its eyes fixed on the Feds for a rate hike from 0.75% – 1%. After some incredible figures in the employment data released last week, showing that unemployment dropped from 4.8% to 4.7%, while non-farm payroll increased beyond expectations to 239k (much more than the 190k anticipated).
The U.S Federal Reserves (Feds) is not the only central bank on the economic calendar. It is however the most important at this point, because no change is expected from the other central banks holding meetings this week.
The Bank of England (BOE) and the Bank of Japan (BOJ) are expected to effect no changes in their respective monetary policies as Article 50 is yet to be triggered and Japanese economic data is showing signs of move out of deflation after the Yen weakened for about four months.
For more information on the economic event coming up visit www.forexfactory.com
This is one pair I am currently playing ahead of the FOMC meeting scheduled for Wednesday, March 15, 2017, as price broke below the 0.76230 support level it tested with a pin bar price action at 38.2% Fibonacci retracement. It has been trading around 0.75400 level and 0.75000 psychological level. Traders who are yet to take a position in this pair should wait for the break and close below 0.74460 level before entering on a retest.
I refuse to be bearish on this pair since it refused to break the 111.500 support level. I have been neutral until price closed above the 34 EMA on the high (green) then my bias changed from neutral to bullish and I am still bullish, despite the short-lived gains of the US Dollar in the late hours of Friday’s trading which is strongly believed to be profit-taking by investors due to the disappointing numbers in wages growth in the U.S economy. Traders who are confident on this trade can buy the dip at 114.800 level with stop loss at 113.620 level and take profit at 118.000 psychological level.
The New Zealand Dollar’s weakness is no news to those who have been following this analysis over the past one month. But the EUR/NZD pair only joined our watchlist last week when it closed above the 89 EMA as it closed on the daily and had gone higher again to close above the 200 SMA on the daily as well last week. I look forward to buying the Euro against the NZD at the retest of the 200 SMA (daily). But before then
I remain on the sidelines.
This pair has been on our watch-list long before it made it above the 200 SMA where it is today. I remember telling traders to put a buy stop at the 1.39670 level. Traders who heeded my advice and analysis at the time will be in a significant profit of more than 250 pips by now. As for new traders or traders who missed that opportunity. I’ll suggest you look into a lesser time frame like the 4-hour (chart below) to buy the pair on pull back to its dips. Traders can use the RSI (7) close to confirm the dips.
Is this latest pair on our watch-list? The pair seems to be forming what is popularly known as the head and shoulder pattern. But for me, the neckline is yet to broken, which means the pattern is yet to be valid. The pair is currently trading at around 0.93200 area which is a trend-line support zone. I am slightly bearish on the pair due to the NZD’s weakness. However, I want to either see a bounce at trend-line support and what price action will form around the 200SMA (black) or a break below the trend-line.
I will begin to give mid-week updates on how some of the pairs are performing and where I’m looking at for opportunities.
Have a wonderful trading week!