Hello Traders,
News Round Up
Fact is, the Euro slow down just begun but that is not what I shall be focusing today. News is, the senate and house republicans have found common ground and their tax bills has been passed. It is even likely to be voted on tomorrow.
On the same vein, the much talked about corporate tax shall be implemented next year and not 2019 as earlier touted. This single factor alone should buoy US businesses and the flight towards the USD and stocks will have a resounding effect on Gold.
Still on politics and in Germany where a government is yet to be formed, there was some positivity as Angela Merkel’s Christian Democrats and the Social Democrats have agreed to get on to the round table and iron out their differences.
This should have been a boost for the Euro but instead, it dipped because there was nothing concrete out of it. Talks is scheduled for January and should the Social Democrats be successful in getting in and implementing some of their hard line views, the Euro will suffer.
Fundamentally, there was nothing much out of the CPI as it remained unchanged at 0.1% MoM and 1.5% YoY confirming what the ECB said last week. Generally, price pressures remain muted and that is why the central bank is leaving their loose monetary policy open ended just in case inflation needs to be supported.
Technical Analysis
The EURAUD is technically bearish. Stochastics is overbought at the weekly chart complete with a sell signal. After last week, a strong bearish engulfing candlestick was formed following December 02 close above the upper BB.
That means EUR was technically over-valued and correction happened to reinstate equilibrium. Pasting a Fibonacci retracement between last week’s high low then we expect to find resistance at around 1.55 which is support for week ending December 8. It is also the 50% retracement level.
The 4HR chart shows some higher highs relative to the lower BB with the 20 period MA acting as our immediate resistance. If price close above that then we wait until a sell signal at or around 1.55 forms before initiating shorts.
Trade as follows:
Sell Limit: 1.55
Stop Loss: 1.56
Take Profit: 1.515
Have a good trading day

euraud 4hr chart for December 18, 2017

Source: Dalmas FX

euraud Weekly chart for December 18, 2017

Source: Dalmas FX

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.