Hello Traders!
I hope you're getting off to a good start to the week. This time I want to talk a little bit about what the evolution of the US dollar has been like over the last few days and what the market expects from a fundamental point of view during the next sessions.
The US has been on the spotlight repeatedly over the last few days. This is due to the lots of news that are going on:
Uncertainty about new stimulus
Monetary policy
Vaccines
Influence of events such as the Brexit
New lockdowns
Now, one of the main factors being observed in the market is the approval of new fiscal stimulus, which can attract the bulls to the USD as it would aim to strengthen the economy, however, with the departure of the Trump administration and Biden's entry, the future of these stimulus packages is extremely uncertain, as well as the expiration or renewal on several measures taken by the current administration, which are due in this month.
Probably the uncertainty around these events, combined with expectations about the COVID-19 vaccines and the lockdowns of some states due to the rise in contagions, has caused the USD to enter a lateral phase that has been valid for about a week. On the bullish side, we have demand for the Greenback due to events like the Brexit since some investors see the US dollar as a safe haven.
Now, into the good ol’ technical analysis, in the EURUSD we can see how, after the bullish rally that we observed a few weeks ago, the market entered a lateral phase, which can be explained by the fundamentals mentioned above. This forms a continuation pattern: A bullish flag. Despite the bullish connotation of the formations, we have on the chart, the side phase mentioned above can perfectly be a consolidation phase prior to a bearish rally, especially when combined with certain notes in favor of the bears by indicators such as Stoch, so I’m not picking a side yet.
Personally, I consider that the points where I could start evaluating a long position are either in the confirmation of the bullish pattern with a breakout of the flag, which would make confluence with the breakup of the resistance that we have around 1.2200, or a short one in the bearish breakout of the area around 1.2050 which has been acting as a support level for the lateral phase that we are currently observing.
In the meantime, until we see which side the market is gonna pick, I’ll keep observing what the evolution of this currency pair is over the next few days.
There you have it folks, hope this idea helps! Don't forget to leave your opinion in the comments on what your expectations are for this currency pair.
As always, plan each trade you take and trade the plan!
I hope you're getting off to a good start to the week. This time I want to talk a little bit about what the evolution of the US dollar has been like over the last few days and what the market expects from a fundamental point of view during the next sessions.
The US has been on the spotlight repeatedly over the last few days. This is due to the lots of news that are going on:
Uncertainty about new stimulus
Monetary policy
Vaccines
Influence of events such as the Brexit
New lockdowns
Now, one of the main factors being observed in the market is the approval of new fiscal stimulus, which can attract the bulls to the USD as it would aim to strengthen the economy, however, with the departure of the Trump administration and Biden's entry, the future of these stimulus packages is extremely uncertain, as well as the expiration or renewal on several measures taken by the current administration, which are due in this month.
Probably the uncertainty around these events, combined with expectations about the COVID-19 vaccines and the lockdowns of some states due to the rise in contagions, has caused the USD to enter a lateral phase that has been valid for about a week. On the bullish side, we have demand for the Greenback due to events like the Brexit since some investors see the US dollar as a safe haven.
Now, into the good ol’ technical analysis, in the EURUSD we can see how, after the bullish rally that we observed a few weeks ago, the market entered a lateral phase, which can be explained by the fundamentals mentioned above. This forms a continuation pattern: A bullish flag. Despite the bullish connotation of the formations, we have on the chart, the side phase mentioned above can perfectly be a consolidation phase prior to a bearish rally, especially when combined with certain notes in favor of the bears by indicators such as Stoch, so I’m not picking a side yet.
Personally, I consider that the points where I could start evaluating a long position are either in the confirmation of the bullish pattern with a breakout of the flag, which would make confluence with the breakup of the resistance that we have around 1.2200, or a short one in the bearish breakout of the area around 1.2050 which has been acting as a support level for the lateral phase that we are currently observing.
In the meantime, until we see which side the market is gonna pick, I’ll keep observing what the evolution of this currency pair is over the next few days.
There you have it folks, hope this idea helps! Don't forget to leave your opinion in the comments on what your expectations are for this currency pair.
As always, plan each trade you take and trade the plan!
