EURUSD Trading Strategy | BTC/ETH Continues Low: I just shared a EURUSD trading strategy with our Premium Investing Group members. Here I’d like to conduct an IDDA for the pair’s performance. We’ll also take a look at cryptocurrencies including Bitcoin and Ethereum.
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IDDA Approach to Developing EURUSD Trading Strategy
Technical Points: The first point of the IDDA focuses on technical analysis. The EUR/USD pair confirmed below the daily Ichimoku cloud on Friday after the European Central Bank decided to prolong its bond purchases and signaled its willingness to stick with an ultra-loose policy stance.
EURUSD Trading Strategy – Daily Time Frame
The pair also broke below the 23% Fibonacci pivot level of 1.17. The future Ichimoku cloud has turned bearish. However, the Tenkan line has yet to cross below the Kijun line. The Chiko span remains inside the past cloud. The supporting pivot is set at the 38% Fibonacci retracement level of 1.1483. Medium-term resistance is set at the upper band of the prevailing Ichimoku cloud, at 1.1869.
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Fundamental Points: The second point of the IDDA focuses on fundamental analysis.
EU side: The ECB said it will extend its bond purchases into September 2018 while reducing its monthly purchases by half to 30 billion euros starting in January. This made market participants bet that the ECB was unlikely to raise interest rates until 2019.
Another factor behind EUR’s bearish sentiment is the tension between Madrid and Catalonia. On Friday, the Catalan parliament declared independence from Madrid following a secret ballot. Spain Prime Minister Mariano Rajoy retaliated by sacking the Catalan government and set elections on Dec. 21. Chaos alert.
US Side: Meanwhile, the U.S. Federal Reserve has remained on its path to hike U.S. rates further. The Fed will hold a two-day policy meeting next Tuesday and Wednesday where policy-makers are expected to leave rates unchanged.
However, besides the economic developments, we could be hearing a very serious political case in the US on Monday. Robert Mueller is on Trump’s case. On Friday, a federal grand jury in Washington approved the first charges in the investigation led by special counsel Mueller into alleged Russian meddling in the 2016 U.S. presidential election.
And of course, Trump had to “Do something” about this. So, on Sunday, he expressed renewed frustration over the investigations into alleged ties between his campaign associates and Russian government officials, saying on Twitter that the “facts are pouring out” about links to Russia by his former presidential opponent, Hillary Clinton.
“DO SOMETHING!” Trump urged in one of five morning tweets.
Market Sentiment: The third point of the IDDA focuses on market sentiment. During earlier hours of Monday’s trading session, the USD markets seem indecisive regarding Trump’s meltdown. Meanwhile, on Friday, retail trader data showed 44.1% of traders were net-long the EUR/USD pair. However, the number of traders net-long was 42.1% higher than Thursday and 34.9% higher from the previous week.
We typically take a contrarian view to crowd sentiment. The recent changes in sentiment warn that the current EURUSD price trend may soon reverse lower despite the fact traders remain net-short.
EURUSD Trading Strategy: As the 4th point of the IDDA, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio. We have shared a couple of medium to high-risk trading ideas with our investing group members. Join us to learn more.
Bitcoin Reaches New All-Time-High, BTC/ETH Continues Low
Bitcoin started the week with yet another bang, surging to a new all-time-high level of $6,300 versus the USD.
Meanwhile, the silver of cryptocurrencies otherwise known as Ethereum, finally broke its streak of consolidation on Monday, testing above the daily Ichimoku cloud and reaching 310 versus the USD. With the future cloud turning slightly bullish, we could expect Ethereum to reach the resistance level of 339 in medium-term.
However, Bitcoin is still outperforming Ethereum, as the ETH/BTC pair continues to hang about the 0.050 support level. Meanwhile, the Chinese might be able to trade Bitcoin again soon. At the 19th National Congress of the Communist Party of China, some temporary regulations and policies are canceled. The shutdown of Bitcoin trading in China might be one of the lucky regulations to get canceled, which could, in turn, help Bitcoin even further throughout the week.
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On the Economic Calendar …
On the economic calendar today, we have the German Retail Sales (SEP) at 7 AM GMT, followed by the UK Net Consumer Credit (SEP) at 9:30 AM. The US will release a bunch of data at 12:30 PM GMT, including their Personal Income (SEP), and the Personal Consumption Expenditures (PCE). The PCE is expected to remain unchanged at 1.3% on a YoY basis. Next German Consumer Price Index (OCT P) will be out at 1 PM GMT, and the combination could create further volatility in the EUR/USD pair.