Hello Traders,
So, just like last year’s Jacksonhole’s commentary, we had several central bank head speaking in Portugal yesterday. Amongst them was Carney and King Mario. It is hard not to assume that Draghi is confident about Eurozone economy and while inflation remains a thorny issue, general growth is positive. Carney on the other hand looks like is fighting a losing war when it comes to inflation concerns. Over the last one week, we have herd two contrasting statements from him and her deputy. Hawkish statements is building up each day and as he is among the MPC votes, more members will likely vote for a rate hike leaving carney all alone in the dove corner in the coming weeks. Mario on the other side is beating up the growth drums while being optimistic that inflation depressants are transitory and therefore see this as a reason to begin a QE reduction cycle which will mean reduction of assets being purchased over an extended period-perhaps for another 12-18 months. This optimistic comments means German Bunds yields trudged higher while peripheral bonds in countries like Italy and Spain remains low as buyer influx continues. The only positive thing about Mario’s growth and inflation expectations is backed by hard data. First, we can see that M3 money supply is increasing at 5% while credit expansion to households is a notch higher to 2.7% and if this lending continues to expand, there is a high likelihood that inflation will follow suit as businesses and individuals expenditure will ramp up.
As shown in the chart, bulls are in charge in this currency pair. There is a buy signal and as price continue to move higher, we shall be looking for opportunities to buy at favorable prices-when there is a correction and ride with the bullish wave. Trading this is simple, the weekly and monthly charts have buy signals and while this was a sharp reversal from last week’s bear momentum, it will be safe to enter long next week or safely today and aim at those resistance levels at 1.1 and 1.12 in the weekly chart. While it seems long shot, it is good to aim for a good risk reward every time you place a trade. This means we trade as follows today if you want to or next week if you feel that this trade is late:
Buy: 1.0930
Take Profit: 1.1, 1.12
Stop Loss: 1.093
Or,
Buy Limit: 1.087-1.09
Take Profit: 1.1, 1.12
Stop Loss: 1.082-support level
Have a good trading day

eurchf monthly chart-29.06.2017

Source: Dalmas Ngetich

eurchf daily chart-29.06.2017

Source: Dalmas Ngetich

eurchf weekly chart-29.06.2017

Source: Dalmas Ngetich

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