TheMarketHacker
Short

EURUSD 11/19/2015 SHORT SETUP #1

FX:EURUSD   Euro Fx/U.S. Dollar
366 3 3
This analysis is in line with TheMarketHacker's Forex Fundamental Outlook for the 3rd Week of November 2015

Hacking the Fundamentals

Nothing new came out of the FOMC Meeting Minutes from October released hours ago. But the market reacted confusingly, triggering a rally for the USD that was instantly negated early in the Asian Session. Some people are doubting the Fed, some even questioning if a rate hike is wise at this stage. While the Labor Sector is improving, and the Inflation is on track, some sectors of the US economy are not as good and could negatively be affected by the hike.

Nevertheless, the Fed wouldn't be this hawkish if they are just playing around. They are dropping big hints to prepare the world for a hike so that when it commences in December, the market's reaction won't be as dramatic. Unless something unlikely happens and the Jobs Data for November erases the previous month's gains, the Fed is still on track for liftoff.

Meanwhile, there seems to be a consensus among observers that ECB's further easing in December is almost a done deal.

Buying the USD against weaker currencies like EUR remains a great opportunity.

Hacking the Technicals

The EUR bulls rallied early in the Asian session today and has taken out yesterday's high. The rally could be stopped by a support turned resistance at 1.0700 which is also the current top of a descending channel that starts at 1.1500. But I don't trade on trend lines specially when the EUR just rebounded strongly against the USD. I am expecting a second leg up for the EUR today until tomorrow, so London and NY session will be watched closely.

Trading the EURUSD

I'm gonna watch how the market reacts today, if I see it struggling at 1.0700, I might trade from there. But if bulls shows some strength, the best entry would be at 1.0770.

Ideal Scenario
Entry: 1.0770
SL: 1.0800 (+30)
First Target: 1.0620
Second Target: 1.0500

Conditional
Entry: 1.0700
SL: 1.0730 (+30)
Target: 1.0620

Main Driver: Strong Bullish Sentiment for USD and Bearish for EUR as Fed Rate Hike looms on December, and ECB goes for more easing.
Reason for Loss: Unexplained Corporate Order Flows strengthening the EUR up to 1.0800.
Comment: If you're a fan of Trendlines, then this could be a reason why the ideal entry is at 1.0770.

snapshot
Comment:
snapshot
Order cancelled: Missed the Trade. It only reached for 1.0750 and not for 1.0770. This week, I'll be looking for more pullbacks. I'm anticipating a consolidation between 1.06 and 1.08. So it looks like it's gonna take a while before EURUSD breaks 1.060, it might take another stellar NFP report.
Hi, it really looks good. I'm just learning, could You tell me how You've drawn second channel ? On what base ?
Reply
Hi Easter, the second channel was formed because of the waning trend, as you can see its angle is less steep than the first one and it shows how the down trend weakened. The first channel has a really steep angle - showing a really strong trend. I'm not really an expert on trendlines and channels. I rarely use it, and if I do, it's just a tertiary or secondary confluent factor on my entries. But you can see how I drew it, and it almost worked, if only the price reached the top of the second channel. It helps to spot trendlines and channels specially when technicals become the mover of the market instead of just fundamentals.
Reply
Great analysis. Completely agree. My thesis on the dollar reversal post Fed minutes was that sellers went into the minutes looking for excuses to cover, and anyone can always find anything they want in the minutes. The strength since the Asian open is particularly troubling.
+1 Reply
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