Kumowizard

EURHUF - can spike to 315+, but we'll see a pullback, then buy!

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Fundamental update: EURHUF             is no doubt very bullish . Actually I think any pull back is a buying opportunity. Basically no positive carry any more for HUF             . RM loaded on local ccy bonds FX unhedged! Few days ago again HUF             denom long end bonds were trading -20 bps             to same maturity foreign ccy REPHUNs. NBH finished with easing cycle, but they managed to press the front end of the curve both in T-Bills and swaps to extreme low, since from August they stopped issuing 2 weeks NBH bills             , they introduced again the 2 Weeks NBH deposit as their main tool. This means international can not place HUF             liquidity with the NBH any more (they used to do it through local banks) and also this instrument is less optimal for local banks due to technical factors. So while base rate is 2,1 %, the T-Bills got smashed down to ard 1,50-1,60 % already. The liquidity is forced out of the NBH. I expect the bond curve to steepen further, and this steepening will be a bearish steepening this time. Then later NBH won't have any other chance but to hike again... so a bearish flattenning will hit in next year, but with the whole curve being under pressure from now! Sell your bonds in Hungary (if you have) buy floaters, or just leave it.
From now on HUF             will be very vulnerable to any local or global risk, and very volatile too.

Technicals:
Daily: Price is reaching a key resistance ard 315 - 315,25. It can even spike above that a bit, but given the Slow Stochastic (which in case of EURHUF             is a really great indicator) we'll likely see a quick pullback from these 314-315 levels to ard 310. Actually it is not impossible that we'll see the same kind of choppy volatile trading that we had in Jan-March, but the base will be higher 310-311.

4 Hrs: Bullish trending, but ADX is very high, and is above DI+ now. It will need to correct down soon. Support is 310-310,50.

Strategy: Only for those who are long still. I'd partially take profit (more clips) in 314 - 316 area, wait for a pull back and rebuy closer to 310.
Important Note: This ccy is only for those who have any real exposure to Hungary. EURHUF             is really illiquid with relatively wide bid/offer, and can become extremely volatile too. Hard to place entry and stops, or at least ATR based position sizing has to be adjusted often.
thanks for analysis I love it
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So far as expected.
New short term sell signal: 1 Hr time frame bearish Kumo breakout sets up, needs confirmation with clearing 312,50 first key Support. DMI bearish with increasing ADX.
4 Hrs: weak bearish Tenkan/Kijun cross developing
Daily: Slow Stoch sell signal!

Take full profit on EURHUF longs. I open short 0,5 unit at 313. Tgt 310, SL 314,25
+1 Reply
agree with you my friend
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Counter short got stopped at 314,25. It did not manage to clear 312,50, price action remained bullish.
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