Last week the markets were quiet, mostly because of the Easter holidays but that did not stop the market from trending sometimes. Because of liquidity concerns-they tend to dip during major holidays-markets usually tend to consolidate and is vulnerable to strong data flows. Trump comments for example about the strong USD caused the greenback to depreciate. This was even made worse by soft US data and the heightening geopolitical tensions-talk Russia, North Korea and Syria. My concern today however is the forthcoming French Election. Any signs of Le Pen losing will be very positive for the Euro. Considering the recent terrorist attacks and anti-immigration policies being floated by her, it should be a concern for the single currency. As a matter of fact, she has promised here supporters a EU referendum within the first six months of her election. It will be interesting to see what happens but at the moment though, looking at the data and events, the path of least resistance is Euro Liquidation. Any incoming polls will have an impact on the Euro and if any poll shows Macron leading, the Euro should appreciate.
Today, I will look to trade the EURNZD and my intention is to buy the Euro. I’m only looking to go long and be in sync with the monthly chart which as you know is king. There is a buy signal already in the 1HR and the 4HR charts. The 4HR chart is even interesting. There is a clear bullish divergence which has developed especially if you check out the stochastics. Since mid last week, prices were dipping while stochastics were moving higher and therefore diverging. The current bullish candlestick should provide a very good buying opportunity and a fair risk reward ratio of 1:4-5.
Trading should be as follows:
Stop Loss: 1.5100-This week’s lows
Take Profit: 1.5360-1.5480 Resistance levels.
Have a good trading day.