Kumowizard

EURHUF - The range should break soon

FX:EURHUF   None
11 0 1
Let's look at my favourite exotic today.
For about a month now, EURHUF             is very difficult to trade for trend traders. The long term bias is still bullish , but it's got stuck in a range between 312,70 - 316,35. For trend traders it has become really bouring, but for range trares it was a perfect playground.

Daily: MACD and Slow Stoch do not really give us too much information. DMI-ADX still has a bullish bias.
Ichimoku components also show this cross is uncertain about the next direction: Tenkan and Kijun stay together, both are flat line. Senkou A and B also points flat, so the bias is getting neutral. Chikou Span hit price candles too.
We still have a longer term and a shorter term bullish trendline in place, the shorter one now matched the lower support of 312,70 (horizontal support and also current Kumo top now. Upper resistance is 316,35.
What's next? I have no idea. We have to watch this tightenning triangle in coming days, that is even more obvious on 4 Hrs             time frame

4 Hrs: it has been swingin ard             the Kumo. Ichimoku is a complete noise now. ADX dropped below 20, there is no direction to trade. For a valid counter trend it should break 313,55 and later 312,55. For the Bulls toget back in power it should finally clear and stax above 316,35.

In Hungary there is one big story still: the conversion of Households FX loans back to HUF             . Actually the big open questions are still: when and in what steps this conversion will happen, so how the commercial banks will have to close their FX and swap exposure. How much it will cost them? How much of the necessary foreign ccy will the NBH provide from its reserves, so what amount and at what exchange rate will they offer EUR for the banks? Will the Banks get something back from the Government (via reduction of their extra banking tax) in return for again taking a huge loss in this exchange game?
This week there is another big question: will the Standard and Poor's Rating Agency finally upgrade Hungary from the Junk category? If they do so, the other agencies will likely follow this step. Actually Hungary's macro figures have improved quite some, the question is if this improvement in growth, etc. is sustainable? Anyway, some kind of "upgrade" is not impossible.
At the end of the year the Governement will have to push down the exchange rate close to or below 305, to meet the constitutional criteria of YoY steady national debt.

So there are quite some fundamental factors pro and contra here. The question again is how much of these possible bullish and bearish factors are priced in? This of course no one really knows. My view is that the NBH and Government is kind of relaxed with the 310 +/- EURHUF             rate. By the end of the year they will have to push it lower, but in 2015 they won't mind if it starts weakening a bit again. Besides these local stories there are obviously the global risk factors which now matter even more in case of the HUF             , since it has already lost it's previously attractive positive carry.

Conclusion: Technicals will show you the direction both short and long term in time. Trade the price action itself rather than trading any forward looking assumptions too early.
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