Yesterday, US Gross Domestic Product (GDP) for the 2nd quarter revised up to 2.5% from 1.7%, and US Initial Jobless claims also declined to 331K, which overall boosted the US Dollar. EURUSD finally broke the 1.3300 support and traded as low as 1.3220, and USDJPY jumped to trade as high as 98.50.
Today we would be watching EURGBP very carefully in order to enter a buy trade from the bottom of the range at around 0.8500 as shown on the 4 hour chart below. Once we get to levels such as 0.8515 or 0.8500, then we will be looking for continuing divergence on the 4 hour chart, and RSI coming closer to extreme around 20 for initial signs to enter a trade.
We already have a 20 candle bear ride on the 1 hour chart as shown below. If we get to the bottom of the range and create a divergence on the 1 hour chart along with a bullish candle pattern, and MACD changing the slope on the upside, then we would jump into a buy trade. Initial target should be the opposite band of the Bollinger on the 1 hour chart and final target would be 20 MA (Moving average) on the 4 hour chart. Stop should be placed below the last low created on the 4 hour chart.
Today is the last trading day of the week, and there are no major events scheduled later for the day. However, we do have Canadian GDP data, Chicago PMI and Michigan Consumer Sentiment to be released in the US session later. Both, Chicago PMI and Michigan Consumer Sentiment are expected to improve, and as a result can benefit US dollar in short term. So be cautious of any profit taking moves as we are also into the month end. I would advise not to chase any trade, and better stand aside if the market behaves in an unexpected manner.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: NZDUSD, EURUSD, GBPCHF, AUDNZD, SILVER, GOLD, USDCAD and OIL
Get it HERE: Vladimir’s Markets Forecast
Have wonderful weekend friends. Happy trading!
