FX Trades of the Week – May 9th, 2016
This week the economic calendar is quite light in terms of high impact news. The Eurogoup called an emergency meeting for May 9th to discuss policy reforms to the macroeconomic adjustment program for Greece which may cause some indecision early in the week for the Euro. The major announcements come out of England and the US at the end of this week, with the UK announcing its interest rates on Thursday, preceded by the month over month Manufacturing Production released on Wednesday. The US reports Unemployment Claims on Thursday morning, with Friday morning scheduled to be a a busy day out of the US with month over month Core Retail Sales, PPI & Retail Sales being reported , as well as the UoM Preliminary Consumer Sentiment reading. With these announcements in the back of our mind, lets get into this weeks analysis.
Building on the analysis from last week (found here), the close over $1.50000 really drove a nice continuation of buying throughout the trading week that was spurred on by the RBA surprising investors with a rate cut down to 1.75% on Tuesday morning. Price dipped right into our value area before the announcement and ripped right through our initial take profit at $1.51363, appreciating as much as 4% throughout the week. This week offers a potential opportunity to jump back into the bullish momentum or to compound your existing position. The weekly close shows great follow through of the bounce off the 200 ma and is suggesting a retest of the trendline resistance near $1.58000 with the daily confirming this view, showing a strong close over the 200 ma and a bullish engulfing candle pointing out a bullish imbalance at the $1.54000 area.
Taking a look at the intraday chart, the setup is very similar to last week’s, however this time price has established a nicely defined bullish trendline that lines up with the $1.54000 level offering additional confluence. The Eurogroup meeting may cause some early chop for the Euro, however there are no high impact news releases coming out of Australia this week so prices should be technically driven and with that we are looking for prices to dip back down to retest the value area near $1.54000-$1.53650 for long opportunities with stops below $1.53500 and initial targets at $1.55800 and the weekly/daily trendline resistance at $1.58000.
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