Even though it’s EURAUD Technical Analysis today, it is without a doubt that the BoE was the day’s main event. Yes, they did raise rates today for the first time in more than a decade. Under normal circumstances, even if it was expected, the GBP would have been soaring but look what happened. It looks like a dark cloud hanged over this currency and dipped more than 200 pips in some pairs like GBPNZD.
Well, with a combination of the start stop Brexit negotiations and the weak economic data over the past half year or so warranted BoE to proceed with caution. As previously mentioned, this was a probably one off thing to tame inflation which is upwards of 2.5% with stagnant wage growth.
Carney was very categorical in his statement, he said that BoE will proceed with caution and rate hike will be at a gradual pace but to a limited extent. This was disappointing for traders who were expecting a clear interest rate forward guidance through to 2018.
Anyhow that was it and as we wait for Trump, unemployment claims ticked lower beating expectations at 229K vs 335K while fundamental traders waited to buy USD on dips. Fed statement read that economic activity was not that bad and was indeed rising at a “solid rate”. If indeed it is at a solid rate, then today’s USD dips provide an excellent buying opportunity for USD bulls.
Back to EURAUD Technical Analysis and this time I’m buying the AUD as I look to take advantage of today’s weak Eurozone inflation data. Inflation dipped to 1.4% vs 1.5% from September. This is after ECB raised concerns about the tepid inflation data and the reassurance by Draghi that ECB are open to shore inflation through further QE if needed.
As noted, there is price action bear divergence pattern relative to the stochastics which are moving lower. Other than that sell signal, there is a clear double bar reversal happening at the 3rd quarter of this wedge meaning at any time there will be a break out. A break out below the 20 period MA and support trend line will be desirable for AUD bulls looking for free swap money.
In the monthly chart EURAUD Technical Analysis, there looks to be a potential head and shoulder pattern with recent highs testing the neck like at 1.554. Secondly, with technical formation in the daily chart, I will look to sell tomorrow especially if there is a strong break below the 20 period MA in the daily chart.
This will turn out as follows:
Sell: 1.505
Stop Loss: 1.52
Take Profit: ideal below 1.41 but look for a risk reward of 1:3
Have a good trading day.

euraud daily chart-02.11.2017

Source: Dalmas

euraud monthly chart-02.11.2017

Source: Dalmas

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