Hello everyone,
Post the FED outcome lot of activity has been going on in the currency markets. Here is a trade idea for one such opportunity.
The fundamental rational:
Powell has been hawkish in his views. Currently market is expecting 4 rate hikes this year along with the thought that inflation in the US market is not temporary as earlier thought.
The impact was such that even a strong GDP number failed to impress the markets (equities).
This has resulted in Dollar strengthening and we observed the following things:
USDINR bounced from a 73.80 region back above 75. Multiple factors: Crude trading above 85, FII outflows in the market has kept a depreciating view for Rupee.
Rupee is weak against the dollar , Euro is weak against the dollar.
Let us look at EURINR weekly chart. Remember these are NDF market charts, the Indian Spot market is already closed. So if refer something as weekly closing below support, I am assuming in the Indian charts, it has occurred.
Price action:
This chart is the weekly price action for EURINR.
Key Observations:
EURINR has moved in ranges previously. The price action was in a broader range of 86.45 and 83.85 levels.
On a weekly basis, price has closed below the range indicating a new phase for weakness.
Let us look at the daily chart to hunt for potential retracement and stop level:
Retracements are a common occurance post any sort of breakout. Price and market players adjust to the new reality. A move above 84.05 is a potential fair level for retracement and a breach should lead to negating this short view.
That means roughly the stop loss on this trade is 40 paisa.
If we use the Ichimoku Analysis:
Chikou Span is breaking freely from the cloud indicating a trend change on the weekly chart.
Here is a look at the daily chart:
Here we analyse momentum :
Chikou has no scope to get stuck in price (it is free of prices)
Span A, Tenkan and Kijun are downward indicating a bearish momentum along with MACD sell signal.
Now let us analyse position sizing and profit targets:
I have used the fibonacci tool and enabled 1.5 and other such levels for target. If we see, the previous move's 100% retracement level break should act as an indication for adding to the existing short position.
Always follow risk management rules and pyramiding is a great way of doing it. Enter half the quantity at MACD sell signal and another half post actual evidence that move is going our way.
EURUSD has given a range breakout as well. When trading EURINR, two pairs are to be observed:
EURUSD and USDINR as EURINR is derived from that. Currently even with INR depreciating against the Dollar we have seen a weak EURINR, indicating the strength in EURUSD downtrend.
Caution:
I am already in this trade. I am following my risk management parameters and I have no attachment towards my view. If it goes wrong, I exit ass quickly I enter.
The views are personal in nature and do not represent views of my employer. I or my employer cannot be held liable for any trading losses. Kindly follow your rules for risk management.
Post the FED outcome lot of activity has been going on in the currency markets. Here is a trade idea for one such opportunity.
The fundamental rational:
Powell has been hawkish in his views. Currently market is expecting 4 rate hikes this year along with the thought that inflation in the US market is not temporary as earlier thought.
The impact was such that even a strong GDP number failed to impress the markets (equities).
This has resulted in Dollar strengthening and we observed the following things:
USDINR bounced from a 73.80 region back above 75. Multiple factors: Crude trading above 85, FII outflows in the market has kept a depreciating view for Rupee.
Rupee is weak against the dollar , Euro is weak against the dollar.
Let us look at EURINR weekly chart. Remember these are NDF market charts, the Indian Spot market is already closed. So if refer something as weekly closing below support, I am assuming in the Indian charts, it has occurred.
Price action:
This chart is the weekly price action for EURINR.
Key Observations:
EURINR has moved in ranges previously. The price action was in a broader range of 86.45 and 83.85 levels.
On a weekly basis, price has closed below the range indicating a new phase for weakness.
Let us look at the daily chart to hunt for potential retracement and stop level:
Retracements are a common occurance post any sort of breakout. Price and market players adjust to the new reality. A move above 84.05 is a potential fair level for retracement and a breach should lead to negating this short view.
That means roughly the stop loss on this trade is 40 paisa.
If we use the Ichimoku Analysis:
Chikou Span is breaking freely from the cloud indicating a trend change on the weekly chart.
Here is a look at the daily chart:
Here we analyse momentum :
Chikou has no scope to get stuck in price (it is free of prices)
Span A, Tenkan and Kijun are downward indicating a bearish momentum along with MACD sell signal.
Now let us analyse position sizing and profit targets:
I have used the fibonacci tool and enabled 1.5 and other such levels for target. If we see, the previous move's 100% retracement level break should act as an indication for adding to the existing short position.
Always follow risk management rules and pyramiding is a great way of doing it. Enter half the quantity at MACD sell signal and another half post actual evidence that move is going our way.
EURUSD has given a range breakout as well. When trading EURINR, two pairs are to be observed:
EURUSD and USDINR as EURINR is derived from that. Currently even with INR depreciating against the Dollar we have seen a weak EURINR, indicating the strength in EURUSD downtrend.
Caution:
I am already in this trade. I am following my risk management parameters and I have no attachment towards my view. If it goes wrong, I exit ass quickly I enter.
The views are personal in nature and do not represent views of my employer. I or my employer cannot be held liable for any trading losses. Kindly follow your rules for risk management.