EURUSD has been climbing from last few days, and I think that the pair may form a top soon and move lower again. There is a bearish hidden divergence on the daily chart as shown below, which is a good sign that the pair may move down sooner or later. So, we would be looking for a sell opportunity.
There is a divergence on the 4 hour chart as well and do not forget that there is a gap to close as well at around.13280. There is a stiff resistance every 30-40 pips as shown in the daily chart above. We can enter a sell trade from any of these resistances and aim for the at least 200 pips or for the gap close. To enter a trade, we need a bearish candle pattern on the daily chart. Risk-reward for such a trade is great, and I think one can try this a couple of times until successful for each of the resistances. Alternatively, there is a trend on the 4 hour chart as shown below. If the pair manages to break the trend line and support at around 1.3580 or 1.3560, and closes below the support, then we can enter a sell trade.
Initial target can be 100 pips, and final target could be all the way for the gap close below 1.3300. Stop should be placed above the previous resistance. So, we have a risk-reward of 1:7.
Reviewing yesterday’s events and trades
US initial jobless claims was released yesterday, which registered another decline in the jobless claims with a print of 308K, beating the expectations of 313K. On the other hand, US ISM Non-manufacturing Index declined to 54.4 missing the expectations of 57.4. Overall, US dollar was unable to recover some of the losses and traded lower. USDJPY fell to four week low of 97.00 and EURUSD traded above 1.3600.
Fundamental Outlook for the day
Today US Nonfarm payrolls was scheduled, but due to US shutdown, it has been postponed. Market was awaiting patiently for this release, and now it would be interesting to see how markets react to this. Three FOMC members, including Fisher, Dudley and Stein will be speaking on monetary policies later in the day, which can cause some movements in the market. Other than this, Canadian Ivey PMI is also lined up in the NY session, which is expected to show improvements from 51.0. I do not expect any major volatility going into the weekend, unless we have some news on the US shutdown. So, trade accordingly and do not jump into any position forcibly.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, USDJPY, USDCAD, GBPCAD, DOW JONES and S&P500.
Get it HERE: Vladimir’s Markets Forecast
Happy Weekend friends. Enjoy!
