Next week could be a quiet week for FX market. There are less economic data released and hesitative psychology of investors could contribute to low for FX market.
I recap what happened last week.
Regarding US economy, FED president Janet Yellen had the first testimony in front of Senate and House about . The main point was FED keep unchanged current monetary policies, and believe in the long term recovery pace of US economy. Besides Yellen Testimony, Retail Sales of US dropped to -0.4%. Negative labour market, declining in Durable Goods Orders, and now falling down of Retail Sales in the third months contributed to the weakness of US Dollar last two weeks. There seems the recovery pace of US economy is halt despite of reassuring of FED Chairman Janet Yellen about prospect of US economy.
Regarding EZ economy, the main point was surprised GDP data. EZ GDP grows 0.5% in Q4 after 17 months having negative data. EZ economy begins recovery period, policies of ECB seem beginning to have effect on the entire EZ economy.
The divergence between US economy and EZ economy could help to figure out the move of EURUSD next week, but everything is not easy. We need to consider many factors before trading.
This week, traders should pay attention in following data:
- Germany ZEW Survey on Tuesday. I believe in positive data.
- FOMC Minutes on Wednesday. I think there is nothing new in this Minutes, most likely FED would provide forward guidance, but I think they would not hurry.
- US CPI on Thursday. I think US CPI would be unchanged.
Hence, In my opinion, economic data this week is not strong enough to drive EURUSD , not enough dynamic or energy.
When Fundamental elements couldn’t provide enough fuel to drive the move of price, there are three possibilities:
- Firstly, trade base on what happened last week.
- Secondly, Wait and observe no trade.
- Thirdly, Trade using .
Basing on what happened last week, the divergence between US and EZ, the mood is BUY EURUSD , but traders must be cautious unpredictable incidents.
- Technical Analysis:
Last Friday, despite of good GDP data, EURUSD couldn’t move above 1.37 key . The price broke 1.37 and then bounced back below 1.37, shaped a . This is a SELL signal, but not a strong SELL signal. However, I see price moved above I show on the chart. This could be a BUY signal.
I checked many indicators and different methods but there is no valuable information. It’s difficult to trade when both TA and FA don’t provide any signal. Trading in this condition is RISK, high Risk, but high risk, high gain.
In my opinion, I choose BUY option. BUY or SELL depends on your Risk Appetite.
The target: 1.38 level.
Stop Loss: 23.6% Fib retracement at 1.3565.
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1. the monthly resistance at 1.382 would work, if not working right now since hit the target on Dec.
2. the second main resistance level is at 1.42, and there are not-weak resistance levels between. every 100 pips high.
There're many other reasons, and as you pointed out, the risk is very high, both sides are possible.
I just see in long term shorting EURUSD is more likely to give off profits if do not care about hundred pips loss.