When Nobody Believed, Bitcoin Rallied 85%

When Nobody Believed, Bitcoin Rallied 85 percent

Do you remember our last article on Bitcoin? It was right after Silk Road has fallen and the BTC dropped suddenly 20% because it has lost some demand. But the story didn’t stop here. This digital currency became of interest for speculators when Cyprus was in a really big problem. The instability of the economy increases the demand for the BTC.

After Silk Road we said that it might go sideways and eventually down. But it was the other way around. After several days the US government announced partial shutdown. This has created a big risk aversion in the markets and speculators saw the opportunity to buy again the digital currency as a safe heaven or just to get our some profits from its volatility.

bitcoin rallied 85 percent

Chart: BTCUSD, Daily

BTCUSD (the Bitcoin/US Dollar currency pair) has gained 85% from the first days of October. Today it reached the high of the last six months above 200.00. If we take into consideration the technical analysis, from here traders should be very attentive to the corrections. The 28 days RSI has moved above the 70 level, signaling an overbought market and the volumes are not that high.

A daily close under the 200.00, round level, followed by a candlestick pattern could signal the start of a corrective move. The target for it could be a Fibonacci retrace of 38.2 or even 50% of the last up move.


United Kingdom Gives Momentum To The Euro Zone

United Kingdom Gives Momentum To The Euro Zone

During the summer, the Bank of England promised to keep the benchmark rate at 0.5% at least until the unemployment rate falls to 7% and the economy starts transferring signals of a strong pace of recovery. Recently, positive signs became more and more visible, as the unemployment rate decreased to 7.7%, raising the hopes to see the labour market remarkable improved by 2015. Still, other parameters need to be considered, as the inflation which remains at 2.7% and threatens to be nearing to 3%. In this case, a further increase in the interest rate needs to be considered. In the meantime, the stimulus program is maintained as it needs to stay in place until the economy prove to be as strong as needed in order to have this aid removed.

The governor Mark Carney has no intention of removing the actual program, on the contrary, he is seriously considering new ways of better stimulating the economy, as it takes all necessary safety measures since the high level o instability in the world’s economy and especially in the European economy.

The main indicator of economic growth last released was the quarterly GDP, which was up 0.8%, beating the expectations of 0.7%, fact that gave momentum to the economy of the United Kingdom. The services sector, which accounts for most of the activity in the British economy, increased with 0.7%. Even if the evolution of the economic growth is still under the rhythm imposed in 2008, given the whole European picture, United Kingdom is finding itself among the countries with the brightest results. It also tends to give momentum to the Euro zone, showing improvements, even if there are countries that need more time in order to find their stability.


What Signals Is The U.S.’s Economy Transmitting?

Taking in consideration the most recent published economic indicators, that aim the American market, we can consider the following deductions:

The core retail sales, which excludes the automobiles, came in line with the expectations increasing 0.4%. It clearly indicates the fact that the consumers were stimulated to buy in September, sustaining a good rhythm of the economy, before the government shutdown “muddied the waters”.

Retail sales, which includes the automobiles, missed expectations, decreasing 0.1% as the auto market is passing through the toughest period since October 2012 (sales dropping 2.2% at automobile dealers).

The producer price index unexpectedly fell o.1% as the previous month increased 0.3%. The price of food decreased, as in general the price of raw materials decreased on account of a decreasing demand fact that led to lower prices on the market. An inflation which remains under the 2% target of the Federal Reserve is clearly giving room to maintain the monetary stimulus.

The consumer confidence index dropped to 71.2 points, strongly disappointing investors, as it concerns the evolution of the consumer’s spending.

Tomorrow the spotlight will be the Fed meeting whose decisions will for sure impact the market. Already indexes start climbing awaiting the decision to maintain the QE3 program unchanged for several months from now on. At the moment, economists consider the keeping of the stimulus program a benefic measure for the American economy, so positive reactions may be see in the market if such a decision will me considered.

Tesla Motors A Good Opportunity To Hunt For A Long

If you don’t remember our last analysis on Tesla Motors , here you have an update. The price of this stock got pretty close to the 200.00$ per share, but did not touch it. After a rejection the sellers managed to push the price back to a key support at 158.50 dollars per share.

tesla motors good long opportunity

Chart: TSLA, Daily

In the current state we can see a Hammer, candlestick pattern, which was formed on some higher volume, false breaking the support. If the price will break the 170$ level, we could see a rally back to the latest top or even to 200$ per share.

On the other hand we should not exclude the possibility of a longer correction move. If on a daily basis, the price will close under 158$ per share a Head and Shoulders pattern would be confirmed. The targets for this pattern are situated at 140.00$ per share and at 123.00$ per share. If the full target of the H&S will be hit, would mean a loss of 22.37% of the current price.

Our preferred scenario is still on the up side, taking into consideration the current trend. The trade setup includes a buying level at 170$, Stop at 153$ and a Take Profit at 200$ per share. Better signals could come after the companies earning report will be released. Until then keep an eye on the price action and the volume patterns.


Trading Plan – A must In The Trader’s Arsenal

Trading Plan

You have probably already heard that it is important for traders to set up a Trading Plan. This should be a must, in my opinion, for novice traders but also for those who have experience (but they know this by now).

Trading Plan

One of the most important attributes of a Trading Plan is that it helps the trader to be disciplined. Discipline is a quality that cannot be taught that easily, but it can be learned in time. Another attribute would be that it keeps details that a human being at some point would forget. It also helps the trader to avoid the mistakes that he already did in the past, but also those that comes from negative emotions like greed and fear.

Trading Strategy

For a novice in this domain to get to have a strategy, he/she would first have to learn about the markets, to get to know the opportunities and to get to know the risks. When a trader found a working strategy or strategies he/she would then have to write every detail of the strategy in the Trading Plan, so that nothing to be forgot. This way the trader will always keep an eye on the trading strategy and will lower his probability to make unnecessarily and unforced mistakes.

Money Management

At least as important as a good strategy is a good Money Management. If you fully understand your trading strategy you can, then, adjust the money management so that you will get even more money from the market.

A good money management, adapted to each situation is one of the best weapons that traders have in their arsenal. You will find different types of Money Management in the trading books, but you cannot take them and apply without any changes. As well as for the trading system, each trader should consider adjusting their Money Management to their own personality.

Trading Schedule

It is important for a trader to set up a trading schedule. Taking into consideration the strategy that he/she has, the time that has at disposal for this activity. It is important to how much time to invest in reading the news, analyze the market, review your instruments and apply the strategy. If you do not allocate properly your time you might end up doing mistakes.

Trading Journal

Each Trading Plan should include also a Trading Journal. Writing the motives of your entries, the emotions that appeared during the trader, but also other details that could help in the future is very important in each trader’s evolution. With the help of the Trading Journal the trader can fine tune his strategy or adjust the money management and the emotion management to improve the results.

These are the main points to be discussed that can be included in the Trading Plan. Even though everybody knows about them, but there are few who use the full power of this weapon.


Prepare For High Volatility In The Forex Market

Prepare For High Volatility In The Forex Market

This week has started with a shortage of the US dollar. Investors went for riskier currencies (Euro, Cable, Aussie, Kiwi, etc.), from the first hours of trading. The stock indices continued to trade sideways while gold and silver had a pretty interesting jump, but did not keep the gains.

This week can get very interesting starting with tomorrow. In the table below you will find the economic indicators that might have the highest impact on the Forex market and will be published in the economic calendars.

Date Currency Forecast Previous
TueNov 5 AUD Cash Rate 2.50% 2.50%
AUD RBA Rate Statement
JPY BOJ Gov Kuroda Speaks
CHF CPI m/m 0.10% 0.30%
GBP Services PMI 60.4 60.3
USD ISM Non-Manufacturing PMI 54.2 54.4
NZD Employment Change q/q 0.50% 0.40%
NZD Unemployment Rate 6.20% 6.40%
WedNov 6 AUD Trade Balance -0.51B -0.82B
GBP Manufacturing Production m/m 1.20% -1.20%
CAD Building Permits m/m 7.80% -21.20%
CAD Ivey PMI 54.7 51.9
ThuNov 7 AUD Employment Change 10.3K 9.1K
AUD Unemployment Rate 5.70% 5.60%
GBP Asset Purchase Facility 375B 375B
GBP Official Bank Rate 0.50% 0.50%
GBP MPC Rate Statement
EUR Minimum Bid Rate 0.50% 0.50%
EUR ECB Press Conference
USD Advance GDP q/q 1.90% 2.50%
USD Unemployment Claims 332K 340K
EUR ECB President Draghi Speaks
FriNov 8 AUD RBA Monetary Policy Statement
CNY Trade Balance 23.5B 15.2B
CAD Employment Change 15.3K 11.9K
CAD Unemployment Rate 7.00% 6.90%
USD Non-Farm Employment Change 126K 148K
USD Unemployment Rate 7.30% 7.20%
USD Prelim UoM Consumer Sentiment 74.6 73.2
USD Fed Chairman Bernanke Speaks
SatNov 9 CNY CPI y/y 3.30% 3.10%
CNY Industrial Production y/y

By far one of the most important days is Thursday. Australia will announce its Employment Change and Unemployment Rate, but the main events are the MPC Rate Statement and the Minimum Bid Rate for the ECB, followed by the ECB press conference. And if this it isn’t enough, the United States will release their advanced GDP and Unemployment Claims.As you can see RBA will publish its cash rate and statement, Switzerland will release the CPI, Great Britain will have the Services PMI, United States will publish the ISM Non-Manufacturing PMI and New Zealand will announce it employment change and unemployment rate. Wednesday Australia will publish the Trade Balance, for Great Britain it will be released the Manufacturing Production and for Canada the Ivey PMI and Building Pemits.

Friday the party will continue with the RBA Monetary policy, China’s Trade Balance, the Canadian Unemployment rate and the well-known Non-Farm Employment Change, which Federal Reserve is observing closely, and Unemployment rate. The day will end with a speech from Fed Chairman, Ben Bernanke.

The week will end with the Chinese CPI and Industrial Production on Saturday.

high volatility week

During the publishing of these indicators and events the volatility will rise for the Forex Market, but not only. If there will be surprises from the Central Banks, changes in their Monetary Policy or big differences between the forecast values and the actual values of the indicators, we can expect for interesting moves.

It is recommended for traders to adjust their trading strategy for high volatility and also to reconsider their money management so that losses can be stopped as soon as possible.


The Path To Take In Finding Your Trading Strategy

The Path To Take In Finding Your Trading Strategy

As a starting point I feel the need to tell you that there is no Saint Grail in trading. I don’t think that there is a single person to have a Secret trading system that it will work 100% of the time, or as well for anyone else that uses it. If a trading system would be given to 10 different traders, it will produce different incomes for each trader, because there are personal factors that will mess with the final result.

The main idea is that you should understand that you cannot find a special strategy that it will work for you as well as for someone else. You should follow some basic steps to find a good strategy and adjust it so that it will bring constant profits in time.

Trading Is A Business!

One of the biggest mistakes that novice do is to believe that from this domain anyone can make big and fast money, without knowledge and understanding of the market. Trading is a business! One that would like to invest should take into consideration this fact and invest time in learning and acknowledging the risks that could appear in this activity.

If the risks are full understood, next step would be to learn about the mechanism, understand how the market moves, which motors turn the wheels and move the price. It will still not be enough to find a strategy.

Basics Rules!

Start learning the basics in technical analysis and fundamental analysis. Apply what you have learned on charts and start reading the price movements. Get into details and find patterns that will help you forecast what it could happen next. Practice and take your time in understanding each new thing you learn.

It will not take long and you will become very enthusiast and you will try to learn more and more thinking that this is the way to have success in trading. You will find out that learning to much it is also a trap of the market. There so many theories, strategies, indicators, price patterns, candlestick patterns, etc. that at some point will end up contradicting each other and you will end up in complete darkness. Take it step by step and don’t rush into learning to many things at once.

Practice, Practice, Practice

Each time you learn something new; don’t take it as it is. Start applying it as soon as possible, turn it 360 degrees and understand everything about it. This way it will be very easy for you to know if it will help you in trading or you could skip it. Taking this path you will see that at a point it will be easy to combine technical indicators or chart patterns and raise the probability to have a successful analysis.

Practicing this in paper trading or even better on demo trading you will see that a trading strategy will emerge. A trading system that is suited for you. It will be tailored for your needs, for your personality and for your risk aversion/appetite.

As you can see there is no short and easy way to get to a good strategy. But you will see that is the one that will bring you satisfaction. Consider investing some time and money in your education. It will be the only way to raise your chances to be profitable in this jungle and avoid being eaten alive. Even if it sounds harsh you should understand that if you do not have the time and money to invest in yourself you should rather consider doing something else.

Should We Invest In Twitter’s IPO ? Future Hit Or Disappointment ?

Should We Invest In Twitter’s IPO

The only reason for which you could not hear about Twitter’s IPO would be that you have been on the Moon for the last couple of months, Twitter will have its debut on the stock market’s stage today and is going to be the most expected initial public offering since Facebook’s rocky debut last year. The company set an initial price range of 17$ to 20$ per share which was raised this week to 23$ to 25$, settling for 26$ a share on late Wednesday. This latest price makes the micro-blogging company’s IPO worth 1.82 billion dollars, the second biggest debut for an Internet company after Facebook’s.

twitter ipo launch

After the raised price range at the beginning of this week and among the euphoria which surrounded Twitter’s IPO, some investors started to question if we are not witnessing a Facebook deja-vu and to expect a close way below the IPO price at the end of its first trading day. Before giving an answer to the investors’ worries, let’s make a parallel between Facebook and Twitter pre-IPO events. In the week leading up to the initial public offering, Facebook set an IPO price range of high $20s to mid $30s which was turned into $28 to $35 price range and closing the pricing IPO at 38$ per share.

Is this sounding pretty familiar? It sounds like it because it really is a resemblance of the events prior to their trading debut and as I mentioned above Twitter have had a similar path. The micro blogging company settle for a final price of 26 dollars a share after raising its IPO range this week from 17$-20$ to 23$-25$ per share.

Moreover, Topeka Capital put Twitter on a buy rating with a 2014 year-target of 54$ and RBC Capital’s Mark Mahaney gave the stock a pre-IPO rating of outperform, or buy, with a $33 price target, arguing that Twitter has become an Internet utility. Also, like Facebook, Twitter’s IPO is making its appearance amid a wave of social media and Internet IPOs. The major interest in Twitter’s IPO is largely based, like Facebook’s launch in May 2012, on expectations of a high-growing business potential, especially in the mobile market.

After all, Twitter is walking in Facebook’s shoes and at the moment prior to the IPO is yet to make a profit, reporting for the first nine months of 2013, a lossof $133.9 million, up from $70.7 million in the year-earlier period. On the other hand, the company posted revenues for the first nine months of this year of $422.2 million — up from $204.7 million in the same period last year.
Taking into account all these similarities, the big question is whether Twitter will share the fate of his “older brother” in its trading debut because that high-profile IPO turned into a sore disappointment for the investors when the stock closed with just a fractional gain on its first day of trading. Facebook shares slid below their $38 IPO price, hitting a 17.60$ bottom in September 2012, and stayed below the IPO price until this summer, when its second-quarter report in late July showed strong growth in mobile ads and sparked strong trading that has since pushed the stock above the $50 mark.

Recent history is a very good guide in helping us to get a glimpse into how Twitter’s first trading day could go and as Colin Cieszynski, a market analyst at CMC Markets Canada, says:“Analysis of previous technology and social media IPOs with high public profiles over the last ten years shows that, while shares have tended to get off to a strong start (even Facebook briefly traded above its IPO price on the first day), initial gains are not usually sustainable”.

So, should we expect a similar turn of events today as well? I wouldn’t jump so fast on this bandwagon of negative expectations regarding the performance of Twitter’s stocks in its first day and let me explain you why by starting my analysis from the manner I think the market will discount the stocks’ price in the near short-term.

In my opinion, there are two major factors that will have the greatest influence in the evolution of the shares’ price for now.

The present global economic outlook is the first one. Right now, the American stock market indices, Dow Jones Industrial Average and S&P 500, are at record levels. This situation is taking place after the momentum of investors sentiment shifted towards a more positive one after the US government managed to bring to an end the debt limit issue. So, even though the United States economic
indicators have shown lately a slow-down in economic growth, the investors are confident about the near future. Europe doesn’t look so bad anymore after the economic recovery seemed to have gained some momentum in the last months. European stock market indices as DAX30 or Europe Stoxx 50 are at record levels as well as the American ones.

The second one regards the basis on which investors may price Twitter’s stocks in the IPO day and in the short-term.

investazor number of twitter mothly active users

Source: http://www.statista.com/topics/737/twitter/chart/1520/number-of-monthly-active-twitter-users/

This basis of pricing would consist of fundamental analysis and market sentiment. Regarding the former, October was the busiest month for U.S.-listed IPOs since 2007, and 2013 is on track to be the best year in terms of deals and ollars raised since 2007. Moreover, Twitter’s 232 million monthly active users its growing revenue and its key place in the conversation about many public events brought a more than doubled revenue of $422 million for the nine months ended Sept. 30. Twitter is seen as ahead of rivals on mobile devices, source of more than 70% of its revenue in the third quarter.

It would appear as Twitter has the wind in its sails for its debut, but losses are growing almost as fast as revenue and user growth is slowing. The number of monthly active users grew 6% in the third quarter, compared with the second quarter, down from 7% in the second quarter and 10% in the first quarter.

Nevertheless, after revising the fundamental part I think the big picture points towards a slightly bullish perspective in the short term. However, I do not think the fundamental part is enough to have a clear idea about how the market will price Twitter in its trading debut because the company needs time to prove if it can improve its key metrics and achieve its revenues objectives in the
following period, let’s say next six months.

Consequently, my strong belief is that the market sentiment will have a greater impact on the pricing than the fundamental analysis. The hype created around the IPO was the biggest one after Facebook’s and overall I think there is a positive sentiment towards Twitter’s initial public offering of today and I expect a strong start, marking a high of 32$ as towards the finish line of the day I expect to see a retreat, closing near the IPO price, around 26$. Furthermore, in the next weeks I see Twitter trading in a price range of 23$-32$, putting it in a moderately bullish perspective.


The Most Likely Scenarios Of The ECB Monetary Policy Meeting Aftermath

The Most Likely Scenarios Of The ECB Monetary Policy Meeting Aftermath

The monetary policy meeting of the European Central Bank for November is going to take place. In this context, the whole economic world’s focus is directed through the possible major changes that can be announced with this occasion and their possible major effects. In order to present to you an overview of this important monthly event of the EURO zone, we drew up a synthesis article.


Short Retrospective Of The Recent ECB Monetary Policy Evolution

If it were to analyze the European Central Bank’s monetary policy in the second part of this year, we can observe – as a general statement – the affirmation consisting of keeping low the interest rates for “an extended period of time.” Accordingly, if we consider the value of the interest rate, we can observe that it has been kept at 0.50% since May 2013.

Since the first months of the year, Mario Draghi, the ECB president, kept admitting the fact that the European economy is evolving at a slow pace, requiring stimulus. Price stability remained the focus of the ECB during the last months while struggling to maintain the inflation at the target of 2%.

In July, some of the main concerns were Greece and Cyprus, which caused destabilization in the European economy. The officials expectations of seeing these countries on a stable track are postpone for 2014. Whereas August didn’t bring any changes, September’s surprised by the vote of the European Parliament to create a single supervisory mechanism and to start the process of composing a banking union which is aimed to help the ECB achieving its targets. In October, positive signals in the real economy gave momentum while advanced steps were taken concerning the banks which will be mainly involved in the single supervisory mechanism as well as a broad assessment in this matter.

These retrospective lines, followed by a deep macro-economic analysis of the last direction in the EURO area’s economy, create a frame that permits us to identify possible scenarios for the ECB meeting.

Is Euro Zone Recovery Going According To Plan?

Not quite, and this is why it gets very interesting. Just when the European economy started to gain some momentum and finally was driving on the recovery highway (Spain being able to pull out of the recession after two years!!!), the last day of October kind of ruined the “Euro zone economic party” after two indicators of major importance gave a warning signal.

We are talking about the inflation rate, which unexpectedly fell to 0.7% from a 1.1% anticipated value and the unemployment rate which also disappointed the investors climbing to 12.2% from a 12% estimated value. This unpleasant surprise was rapidly discounted in the market price leading to a 1.1% Euro diving to 1.3581$.

Besides that, these two dark horses (unemployment and inflation) immediately fuelled the speculations that ECB is likely to cut the interest rate at the next monetary policy meeting on 7th of November in order to avoid a deflation and to have a better shot at the 2% inflation rate target.

Leading to the ECB monetary policy meeting, Wednesday brought us stronger-than-expected German industry orders, an actual 3.3% from a expected 0.6%, increasing the expectations that ECB would keep rates unchanged on Thursday despite a steep fall in inflation and helping push the Euro up 0.3% to $1.3518.

To cut the story short, we are going to give you a few scenarios for possible outcomes of the ECB monetary policy meeting:

1. After the significant drop in the inflation rate and the fears of a potential deflation, ECB decides to cut the rates and has a more-than-expected dovish tone. In this scenario, taking into account that markets are expecting a hold in the interest rates, we see a significant drop of EURUSD and the European capital markets indices.

2. In the second possible outcome, we expect an “I wouldn’t be so worried” speech from Mario Draghi in which he states that the European economic recovery is evolving, but at a slow pace and the markets should not panic because ECB has the situation under control. In this case, we could see a slight gain of EURUSD and the European capital markets indices because investors already discounted in the market price that ECB will maintain the rate unchanged. Besides that, the upward push would also come from the fact that investors would see this kind of speech as a vote of confidence in the European economy from Mario Draghi.

3. In the last scenario, we still expect that ECB would maintain the interest rates at the same level, but Mario Draghi will hint at a potential cut in December if the macro indicators show a declining state of the European economy. In this situation, markets will rush to discount in the prices a potential December rate cut, pushing EURUSD and the European capital markets indices downward at a moderate pace.

Technical Overview Of The Market Before The ECB’s Monetary Policy

After clearing out our economic scenarios for the next ECB monetary policy, let us take you now through the technical scenarios that could follow on medium term time frame for some of the most important instruments.

Mario Draghi could keep its optimistic tone and strengthen investors’ confidence in the Euro Area economy triggering this way new buying momentum for the Euro. EUR/USD has fallen to the support area created by the uptrend line and the 1.3450 support level. Here we can see that it is hesitating, meaning that the market is waiting also for fundamental reasons to head into a certain direction.

From the technical point of view EURUSD is still in an uptrend as long as the trend line will not be broken. A bounce from this current area could bring the Euro back to 1.3650/1.3700. Stronger confidence in the direction of the economy could mean also aggressive buying that could move this currency pair above 1.3700.

On the other hand a more dovish approach, of the ECB, could trigger aggressive selling of the Euro. The current fall of the EURUSD, fueled by good economic data from the United States, could accentuate tomorrow if the ECB will surprisingly cut the interest rate, or announce a possible cut in the near future. A daily close under the trend line could only mean that the US dollar could strengthen all the way to 1.3300/3200 or even 1.3100 if the Non-Farm Employment from Friday will be above expectations.

eurusd before ecb monetary policy

Chart: EURUSD, Daily

If EURUSD still has some bullish potential, EURJPY doesn’t look that good. On this currency pair’s price chart a Rising Wedge has emerged during the last months. This price pattern is accompanied also by negative divergences on the 56 days RSI; both signals could announce a reversal in the current uptrend.

A dovish approach could push the price of this pair under the current low, 132.40, and open the way for a down trend that could target the level 125.00. A 6% drop of this pair is also the full target of the Rising Wedge.

On the other side, if Euro will recover after the ECB monetary policy of this month, we might witness a rally of the EURJPY back to 135.00.

eurjpy before ecb monetary policy

Chart: EURJPY, Daily

Another interesting instrument to follow would be, from our opinion, DAX30. The German stock index gives some bearish signals when applying technical analysis. The price has hit the rejection line of the uptrend channel and the 14 days RSI which has crossed above 70 level and drew a small negative divergence while falling back under the overbought limit level.

Bad news from the ECB could be the argument for the markets to sell sell sell! A drop under 8960 would also be the technical confirmation for a deeper correction of the current trend. The target level for a drop could be 8760, but the price might end up even lower if the economic data will continue to disappoint the markets in the near future.

A positive scenario would move the price above 9100 and this could mean free hand for another rally with limits at 9200 and 9300.


Chart: DAX30, Daily

As you can see the markets are barely waiting for the ECB monetary policy from tomorrow. In the past this meetings followed by the press conference have triggered high volatility in the Forex and Equity markets. We recommend traders to be attentive to details and manage their positions with high responsibility, because the market emotions could end up hitting their stop losses.

After the conference has ended and the market sided with a direction, don’t think that the party it’s over. Friday will be published some very important indicators from the US labor market that could strengthen the direction or turn it around.



EURUSD Forecast For This Week

EURUSD Forecast For This Week

For better understanding the future movement of the EUR/USD currency pair we should take a look over last week’s events.

Wednesday we published our scenarios for what could happen at the ECB monetary policy from the next day and one of the preferred scenarios was for the ECB to cut the interest rate. Unexpectedly, on Thursday, the ECB has cut the minimum bid rate to 0.25% and mentioned that it can be lowered if needed. This had a negative impact for the Euro, which dropped in front of the US dollar.

eurusd week forecast

Chart: EURUSD, Daily

The uptrend became sensible when the price of EURUSD broke the 1.3450 support and the trend line. On Friday the United States posted the Non-Farm Employment change above the expectations, sending the US dollar higher.

From the technical point of view we can see that the price has stabilized itself around 1.3400 with a very good support at 1.3300 and a key resistance at 1.3450. A daily close above this resistance could mean a rally towards 1.3500, but our preferred scenario would be a rejection from 1.3450/70 followed by a drop under 1.33 with a target of 1.3200.

The drop in the price would also be sustained if the flash GDPs and the Industrial Production for the Euro Area will be published in line or under the estimates, while for the USA the Trade Balance and the Unemployment Claims would surprise with better readings.