6EH3 High: 1.0870 Low: 1.0580 LowerWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
6EM2021 trade ideas
EURUSD Short-Term Bullish AnalysisClick on Boost (like) to support these free analyses
This expectation is a framework to look for a potential trading setup; I recommend you to not just execute based on these levels. I always wait for confirmations on lower timeframes
This Analysis was done using my complete Strategy which includes:
- Smart Money Concepts
- Multi Timeframe Liquidity and Market Structure
- Supply And Demand
- Auction Theory
- Volume Analysis
- Footprint
- Market Profile
- Volume Profile
- Wyckoff
- Etc.
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.08110
Pivot: 1.06915
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.08110 where the previous swing high is.
Fundamentals: There are no major news.
6EH3 High: 1.0870 Low: 1.0580 LowerWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.10590
Pivot: 1.08270
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.10590 where the previous swing high is.
Fundamentals: There are no major news.
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.10590
Pivot: 1.08270
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.10590 where the previous swing high is.
Fundamentals: There are no major news.
Is USD rebounding or reversing?Thanks to a strong January employment report, the greenback made an impressive comeback from the weakness since Q4. Someone might expect the strength could persist and even test 2022’s high, but I regard this as a rebound and the dollar will likely trade in a range between 100 to 108 (Dollar Index basis) in 1H 2023.
First of all, the strength of greenback last year mainly came from an aggressive rate hike by Federal Reserve that kept the bond yield evaluated and widened the yield differential. As the chart shown, the yield differential of 2-year bond between US and German kept widening since 2H 2021 and reached the peak at Q3 2022. In the meantime, the dollar was on the uptrend against euro and other major currencies. When there was expectation the Fed will slow the hike pace, and ECB was becoming more hawkish to tackle inflation, the yield differential narrowed since Q4 that caused the weakness of dollar.
After the FOMC meeting and before the employment report, the market downplayed the need for Federal Reserve to hike rate and even expected a rate cut by the end of this year in response to possible recession, turned a deaf ear to what J. Powell was delivering. Disinflation he mentioned is a term describing the inflation is dropping, which is nothing new that we can see from the inflation data (Benchmark, Core or PCE) in the last few months, and didn’t mean the inflation have dropped to the target level. His remark on 7 Feb about rate could be hiked to a level higher than market expectation showed there are more works Federal Reserve need to do.
The strong employment report reminded investor inflation is still a major risk to the economy and the Federal Reserve might need to hike further to contain inflation. Market’s expectation on the “terminal rate” revised upward and the bond yield moved higher that contributed to the rebound of the greenback in the last few days.
There are many factors affecting the movement in FX market, but the yield differential seems having a dominant effect in the last few quarters and could be the factors to watch in 1H 2023. I keep my conviction the Fed Funds rate will peak at 5.00% (lower band), which mean two more 25bp hike is coming. However, the hiking pace of ECB is even more hawkish and a 50bp rise is expected in their next meeting, and more could follow after. The higher and stubborn inflation in eurozone could make ECB keep hiking rate even if Fed paused, that might translate to narrower yield differential that is not positive to the greenback.
Another interesting area to note is the yield of US 2-year note. The inversion of yield curve is implying a recession, but what if US can avoid recession, especially when the US job market is surprisingly impressive? Assuming US will not have recession, the yield spread between 2-year and 10-year bond should narrow, then how will they move respectively? A normal yield curve is 10-year yield higher than 2-year yield, while I don’t think 10-year yield will have the potential to rise to 4.5% or higher due to disinflation and technical reason, there is not much room for 2-year yield to rise further and even has a potential to retreat. A lower 2-year yield will lower the yield differential against other major currencies, that is negative to the USD. Even US 2-year yield revisit last Nov’s high, the German 2-year yield have risen 50bp from that level already.
Since the rebound of the greenback released some overbought pressure and created a better entry point, you might consider a long position on EUR(6E) now, a short-term (1M) target at 1.1000 and a longer-term (1H) target at 1.1500. Stop loss could be set at 1.0500. If you disagree with me and believe the greenback in a reversal mode, you might consider a short position in gold since it could face further pressure after recent correction since it still accumulated meaningful gain in the last few months.
Disclaimers
Above information are for illustration only and there is no guarantee on the accuracy of the information. They should not be treated as investment recommendations or advices.
CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.10590
Pivot: 1.08270
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.10590 where the previous swing high is.
Fundamentals: There are no major news.
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.10590
Pivot: 1.08270
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.10590 where the previous swing high is.
Fundamentals: There are no major news.
EURO FX Futures ( 6E1! ), H4 Potential for Bearish DropTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bearish Drop
Type: Bearish Drop
Resistance: 1.10590
Pivot: 1.08270
Support: 1.05290
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bearish due to the current price being below the Ichimoku cloud , indicating a bearish market. If this bearish momentum continues, expect price to possibly continue heading down towards the support at 1.05290, where the previous swing low is.
Alternative scenario: Price may head back up towards the resistance line at 1.10590 where the previous swing high is.
Fundamentals: There are no major news.
6EH3 High: 1.0960 Low: 1.0745 SidewaysWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
EURUSD Short-Term Bullish AnalysisClick on Boost (like) to support these free analyses
This expectation is a framework to look for a potential trading setup; I recommend you to not just execute based on these levels. I always wait for confirmations on lower timeframes
This Analysis was done using my complete Strategy which includes:
- Smart Money Concepts
- Multi Timeframe Liquidity and Market Structure
- Supply And Demand
- Auction Theory
- Volume Analysis
- Footprint
- Market Profile
- Volume Profile
- Wyckoff
- Etc.
6E!CME:6E1!
looks like this will be in a range for some time
can see moves between those lvls marked
6EH3 High: 1.0960 Low: 1.0745 HigherWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
6E!CME:6E1!
EUR forex
going good on the hourly
needs to hug the median and keep up
heading into short zone scalp
R2 1.098
R1 1.095
and
S1 1.091
S2 1.088
6EH3 High: 1.0960 Low: 1.0745 HigherWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
EURO FX Futures ( 6E1! ), H4 Potential for Bullish ContinuationTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bullish Continuation
Type: Bullish Continuation
Resistance: 1.09390
Pivot: 1.07540
Support: 1.05675
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bullish due to the current price being above the Ichimoku cloud , indicating a bullish market. If this bullish momentum continues, expect price to continue moving towards the overlap resistance at 1.09390, where the 50% Fibonacci line is.
Alternative scenario: Price may head back down to retest the pivot at 1.07540, where the 38.2% Fibonacci line is.
Fundamentals: There are no major news.
EURO FX Futures ( 6E1! ), H4 Potential for Bullish ContinuationTitle: EURO FX Futures ( 6E1! ), H4 Potential for Bullish Continuation
Type: Bullish Continuation
Resistance: 1.09390
Pivot: 1.07540
Support: 1.05675
Preferred case: Looking at the H4 chart, my overall bias for 6E1! is bullish due to the current price being above the Ichimoku cloud, indicating a bullish market. If this bullish momentum continues, expect price to continue moving towards the overlap resistance at 1.09390, where the 50% Fibonacci line is.
Alternative scenario: Price may head back down to retest the pivot at 1.07540, where the 38.2% Fibonacci line is.
Fundamentals: There are no major news.
EURUSD Short Term Analysis/ExpectationClick on Boost (like) to support these free analyses
This expectation is a framework to look for a potential trading setup; I recommend you to not just execute based on these levels. I always wait for confirmations on lower timeframes
This Analysis was done using my complete Strategy which includes:
- Smart Money Concepts
- Multi Timeframe Liquidity and Market Structure
- Supply And Demand
- Auction Theory
- Volume Analysis
- Footprint
- Market Profile
- Volume Profile
- WYCKOFF (IS THE KING)
- ETC
Where is the EURUSD headed amid the EU and US inflation lag?We hope everyone had a great start to the year! As we think about the year ahead and some of the major themes that might play out, the EU vs US inflation story is among those catching our eyes now in particular.
“Inflation” & “Rate Hikes” were the main talking points for the US Economy in 2022 as the US Federal Reserve (Fed) reacted and adjusted to stubborn inflation. On the other side of the Atlantic, a similar situation is playing out, albeit with a 4 to 7 months lag behind the US.
Measuring the difference between the turning points, we can roughly determine the lag between the economic indicators. Headline Inflation (top chart) in the US moved up close to 7 months before the EU’s. Core Inflation (middle chart) in the EU lags the US by 5 months. Policy reaction (bottom chart) of the European Central Bank (ECB) lags the Fed by 4 months.
This dynamic is important when trying to understand the path forward for the EURUSD currency pair as central banks watch inflation figures and adjust policy rates accordingly.
EU & US policy rate differentials help us sniff out major turning points for the EURUSD pair. As seen in the chart above, the yield differential measured using CME Eurodollar and Euribor futures, started to widen in September 2021, which marked the EURUSD tumble from 1.160 all the way to 0.987.
But now it appears the reverse is happening. Yield differentials are starting to close as markets adjust to slower pace of rate hike environment in the US while ECB still battles stubbornly high inflation. Using CME’s Fed watch tool as well as Bloomberg’s OIS Implied Euro interest rate probability tool, we can estimate the market implied forward path for the 2 major central bank’s policy rates. With the market expecting the Fed to pause rate hikes in March, while the ECB is expected to only pause in July. Interestingly, the difference in expected rate pivot is in line with the 4 to 7 months lag in economic conditions we established from the analysis above. As the ECB continues to hike while the Fed pauses, yield differential is likely to close, helping to boost Euro’s attractiveness against the USD.
Coupled with the dollar’s downward momentum, This could favor further strength in the EURUSD pair.
On the technical front, we see a golden cross with 50-day moving average crossing above the 200-day moving average for the pair. Coupled with an uptrend and spike in the RSI, it has marked the recent up trends remarkably well. If this historical behavior holds, the EURUSD pair could still have further room to run.
For those who use Parabolic SAR, the current chart has just flipped back to a buy signal after the recent price consolidation.
Given the ECB’s policy lag, dollar weakness, and a bullish technical setup, we lean on the buy side for the EURUSD pair. We set our stop at the 1.0520 level, and take profit level at 1.12800, with each 0.00005 increments per EUR in the EURUSD futures contract equal to 6.25$.
Do also check out our previous EURUSD idea which played out nicely:
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Sources:
www.cmegroup.com
www.cmegroup.com
Bloomberg
6EH3 High: 1.0960 Low: 1.0580 HigherWeekly Kickoff levels are longer timeframe levels where we believe longer time traders will adjust inventories.
