The EURCHF pair is trading lower for the last couple of weeks. However, the pair is now coming closer to a major support level, as shown in the 4 hour chart below. There is little room for the pair to drop lower, as there are several supports for the pair to the downside.
There is a wedge forming on the 4 hour chart for the pair as well, as can be seen in the below. If the pair breaks higher, then I think the pair might continue trading higher. There is also a resistance at around the 1.2215/20 level. So, if the pair breaks the wedge and the resistance, closes above it, then we can jump into a buy trade once the pair drops lower to re-test the broken resistance zone. Remember, wait for the pair to close above the wedge, and avoid trading any false move.
Initial target should be around the 1.2280 level, and final target could be around the next down-move trend line, as shown in the chart below. Stop should be placed below the last low created.
Reviewing yesterday’s events and trades
Yesterday, a lot of economic data was released in the European session. The manufacturing PMI’s were the highlight during the European session. The French, German, Spanish and Euro zone manufacturing PMI’s registered gains, and came better than expected. The EURUSD managed to hold the last week’s low after the data release. On the other hand, the UK manufacturing PMI missed the expectations and registered a reading of 56.7, which caused some selling in the GBPUSD pair. Later, during the NY session, the US ISM manufacturing PMI was released, which came as a disappointment. The USDJPY is trading touch lower after the release.
Fundamental Outlook for the day
Today, the UK construction PMI data, Euro zone PPI data and Italian inflation figures will be released in the European session. Later, in the NY session, the US factory orders and Investor’s Business Daily (IBD), TechnoMetrica Institute of Policy and Politics (TIPP) Economic Optimism Index will be released. We need to see how the US dollar performs in the US session. During the next Asian session, we have the New Zealand’s employment report scheduled, which can act as a strong catalyst for the New Zealand dollar, which is trading lower against most of the major currencies.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, USDCAD, NZDUSD and AUDNZD.
Get it HERE: Vladimir’s Markets Forecast
I wish everyone a wonderful and green week. Happy trading friends!
