US ISM manufacturing Index released yesterday jumped higher to 55.7 beating the expectations of 54.0. Market was expecting a decline from the previous reading of 55.4, but instead we got an improved reading, which overall boosted the US dollar. EURUSD traded as low as 1.3140, and USDJPY traded higher towards 99.90.
Today, we have a great buy opportunity for EURAUD. EURAUD is completing a bend to bend move, and approaching important supports as plotted on the daily chart below. In long term, I believe the pair will continue heading lower, but currently we have an interesting intraday buy opportunity.
Looking at the 4 hour chart we almost have a 20 candle ride, MACD is at extreme compared to last 6 lows and RSI is also at extreme around 20 as shown in the charts below.
We can enter a buy trade in EURAUD in two ways. First would be small retracement up and then down again to test lows or may be lower, and create a divergence on the 1 hour chart to jump in a trade. Second would be 3 wave up scenario as shown in the chart below. Initial target would be the opposite Bollinger band around the trend line shown on the chart, and final target could be around 1.4650 or 1.4700. Stop should be placed below the supports plotted on the daily chart.
Bank of Canada (BOC) interest rate decision is scheduled later in the US session, and BOC is expected to keep the cash rate unchanged at 1.00%. Bank of Canada Governor Stephen Poloz will also speak at the time of rate decision, and his speech will be monitored closely regarding the outlook of the economy and further policies of BOC. US trade balance figures and Beige book will also be released in the NY session. Keep a close eye on The Federal Reserve’s Beige Book to know about the current economic conditions in Federal districts. Any optimistic outlook can turn out to be US dollar positive as bets of September tapering increases.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, USDJPY, GBPCHF and S&P 500
Get it HERE: Vladimir’s Markets Forecast
Trade carefully friends. Happy trading!
