EURUSD - Will The USD Become The Strongest Currency?
Analysis:
When we take a look at the technicals for EURUSD, price looks as if it's in an upwards trend as we're forming a series of higher highs and higher lows, indicating to us that we want to long however this isn't what we see and we actually see early signs of a reversal happening. To begin with we have this downwards trendline. Although it has only been respected twice we expect that it will actually hold again for a third time and we will see price reject off of this area. Another confluence on why we think that this area will hold as resistance is because its been tested multiple times. If we look left we can see that price has come to this area before and we then saw a rejection. This has happened twice now and due to other confluence factors we see this happening again. Our final technical confluence factor that we have is this ascending triangle that we broke out of in may indicating to us that there could be some bearishness on the horizon. We're now retesting this ascending triangle and we expect that it will hold as resistance and that price will reverse back to the downside. A big reason for this setup though is the fundamentals so lets take a look at these too. Fundamentally the EUR is just about the 1st strongest major currency compared to the USD which is the 2nd strongest major currency but these two currencies are very close in strength. Whilst this looks like it goes against our idea if we look a little further we get more important data. As of the most recent filling we saw a decrease in long positions by institutions on the USD but we saw an even bigger decrease in short positions by institutions on the USD indicating that there could be some more bullishness coming to the USD whereas for the EUR we saw a decrease in short positions by institutions but an even bigger decrease in long positions by institutions which is bearish for the EUR. This is why we are actually fundamentally bullish on the USD over the EUR. so along with the technicals that we see we're bearish on the EURUSD. Just a note however, this isn't our favourite setup but it fits our plan. We know our strategy is profitable which is why we're taking this setup. We won't know the result until the end but what we know now is that this setup has an edge in the markets so its worth taking and we're confident in it. With that being said lets see if we get that move that we expect.
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all.
Stay Safe - JPI
Disclaimer:
This does not constitute as financial advise. We are not responsible for any monetary loss that you endure. Trading is hard to be profitable with and we take losses just like everyone else does to. Our ideas won't always be correct which is why we urge you to always do your own analysis first before entering into the market but please feel free to use our analysis to assist you with yours.
When we take a look at the technicals for EURUSD, price looks as if it's in an upwards trend as we're forming a series of higher highs and higher lows, indicating to us that we want to long however this isn't what we see and we actually see early signs of a reversal happening. To begin with we have this downwards trendline. Although it has only been respected twice we expect that it will actually hold again for a third time and we will see price reject off of this area. Another confluence on why we think that this area will hold as resistance is because its been tested multiple times. If we look left we can see that price has come to this area before and we then saw a rejection. This has happened twice now and due to other confluence factors we see this happening again. Our final technical confluence factor that we have is this ascending triangle that we broke out of in may indicating to us that there could be some bearishness on the horizon. We're now retesting this ascending triangle and we expect that it will hold as resistance and that price will reverse back to the downside. A big reason for this setup though is the fundamentals so lets take a look at these too. Fundamentally the EUR is just about the 1st strongest major currency compared to the USD which is the 2nd strongest major currency but these two currencies are very close in strength. Whilst this looks like it goes against our idea if we look a little further we get more important data. As of the most recent filling we saw a decrease in long positions by institutions on the USD but we saw an even bigger decrease in short positions by institutions on the USD indicating that there could be some more bullishness coming to the USD whereas for the EUR we saw a decrease in short positions by institutions but an even bigger decrease in long positions by institutions which is bearish for the EUR. This is why we are actually fundamentally bullish on the USD over the EUR. so along with the technicals that we see we're bearish on the EURUSD. Just a note however, this isn't our favourite setup but it fits our plan. We know our strategy is profitable which is why we're taking this setup. We won't know the result until the end but what we know now is that this setup has an edge in the markets so its worth taking and we're confident in it. With that being said lets see if we get that move that we expect.
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all.
Stay Safe - JPI
Disclaimer:
This does not constitute as financial advise. We are not responsible for any monetary loss that you endure. Trading is hard to be profitable with and we take losses just like everyone else does to. Our ideas won't always be correct which is why we urge you to always do your own analysis first before entering into the market but please feel free to use our analysis to assist you with yours.
Note
Our entry criteria has been met and our order has been filled. We're currently short EURUSD expecting that this area will hold as resistance again and we'll see price head to the downside. We'll be sure to keep you all informed about any changes or updates!Note
This morning we had some news come out for the EUR which was mostly all negative, showing that our idea that the EUR is losing its strength is starting to happen and this is looking good for our trade at the moment. We also had some bullish news come out when Fed Powell spoke yesterday so this is also helping out our positions. Later today we have some more news coming out for the USD which if is better then expected then this will help out our idea and this setup will start to look like a very probable profitable trade. If it comes out worse then expected then we don't really expect that much of a reaction due to the EUR weakness that we saw this morning. Overall things are looking very bearish for the EURUSD which is good for our trade and we expect that this will continue. Technical wise we also don't have any real strong area of support until our take profit so we're liking how this setup is looking and going so far!Note
On Friday we managed to get a close below the recent higher low showing to us that the bears are in control now, signifying more downside potential and with the strong rejection we've seen from our area of resistance everything is pointing that price will head to the downside. With the USD news that is coming out on Wednesday and Thursday this could strengthen our idea. We'll update you on what we expect to see closer to the time and we'll be sure to update you after these events happen too!Note
Update - 3Yesterday we were expecting that price would hold the previous higher low that we pointed out in our last update but this wasn't the case. We are still bearish on this pair though as the USD is now the strongest major currency whereas the EUR is the second strongest major currency so this goes in our favour. As well we saw a big increase in short positions on the EUR for institutional positioning so this is another factor that is pointing to bearishness for this pair. We also had some news come out for the USD yesterday which was better then expected so this could be the start of the bears stepping back into the market and the USD bulls to push prices higher which in turn would drag EURUSD down. Overall everything is still looking good for this pair, in fact things are looking better now. Today we have the Fed chair speaking which could further help our trade. We'll update you all once we see how the market reacts to this news.
Note
Update - 4Yesterday we were waiting for the Fed chair to speak to provide some more clarity on the USD as this could help the USD to gain more strength and momentum. The talk seemed to be pretty bullish for the USD and this is reflected in the price as we saw some bullish action for the USD yesterday. Today we have unemployment claims coming out for the USD. We'll be paying close attention to this as this will provide a lot of momentum for the USD, whether the news is bullish or bearish. We'll be sure to update you all once we see how the market has reacted to this news.
Note
Update - 5As mentioned in our previous update we were waiting for unemployment claims to come out for the USD to provide more momentum and clarity for the USD and that is exactly what we got. The news was better then expected so we saw price break below the area of support that we have marked out showing us the strong bearish momentum which favours our idea. Price has formed a downwards channel which it is currently respecting so this pullback that we saw on Friday isn't anything to worry about as this is a healthy pullback. We're currently retesting a key level of previous support now turned resistance. On Monday if we can see this level hold and the upper downwards channel trendline hold as well then this would make our bearish thesis very likely. This is what we'll be looking for in the upcoming weeks.
Note
Update - 6Yesterday we had some news come out for the USD which was worse then expected, although we didn't really see much price movement which goes to show the bearish pressure that is present. Today is a bank holiday for the USD so we don't expect to see much price movement however tomorrow we have FOMC meeting minutes which could provide a lot of momentum into the markets so this is something that we'll be watching out for. Looking at the technicals as well, yesterday we saw price form a hammer candle stick pattern at our area of resistance that we had marked out, indicating more possible bearishness is to come. If we're able to get a bearish engulfing today then this would provide us with more confidence in this trade as it will be another confluence factor that goes in favour of our idea. Currently everything is still looking positive for this setup and we'll be waiting for FOMC to hopefully give us some more bearish pressure for this pair.
Note
Update - 7In our previous update we mentioned that we wanted to see a bearish engulfing form on the daily timeframe and this is what we got yesterday. This provides us with more bearish confluence as this is a bearish candlestick pattern. The price rejection that we got from our area of resistance that we called out yesterday shows that the bears are in control of this market and want to push price down further. These two bearish confluences favour our idea, giving us even more confidence then we already have to be short on this pair. Today we have FOMC meeting minutes coming out which will have a big impact on the USD. Once we see how the market reacts to this release we'll update you all tomorrow.
Note
Update - 8The FOMC meeting minutes came out yesterday which looked bullish for the USD so we saw price make a slight move to the downside. This news favours our trade and gives us possible insight into the USD news due later today. Price was also able to break below the previous lower low, showing that we're still in a downwards trend. Yet again this favours our trade. Later today we have a lot of USD news to come out which will have an impact on our trade. Obviously we want this news to be bullish for the USD, however we won't know if it is until the news comes out, but we will update you all once it happens!
Note
Update - 9Yesterday we were wanting to see some bullish news for the USD, however the news seemed pretty mixed so there wasn't enough confidence for the USD bulls to step in and push price down further, so we ended up finding support where price reacted strongly from. Whilst this may not look good for our trade, to us this looks like a pullback before a continuation move to the downside. Price is still in a downwards trend, respecting our descending channel and our levels of resistance, showing the bearish pressure on this pair. Today is a big day for the USD with NFP data coming out. As mentioned in the photo attached, we'll be looking for this news to be bullish for the USD and to see price break below the area of support we have marked out. If this is to happen then this will look very strong for our trade. Obviously we could be wrong but this is just our ideal scenario. Once we see how the market reacts to the news we'll update this idea with our thoughts.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.