In my currency forecast blog of last week (please click here to read it) I was looking for a buy, with a rejection from the top of the red thin resistance line, marked by the yellow circle. It did reach the 101.00 level that I was expecting and continued to appreciate to 101.26, falling short of my next high prediction which was 101.50.
This week starts with the US Fed Chair Yellen speaking at the University of Michigan where questions will be asked about monetary policy and the trimming of the US $4.5 trillion balance sheet. Market volatility is expected. Technically, as Friday’s Japanese candlestick did not manage to retrace, I am looking for a possible retrace up to the 100.80 area before continuing the appreciation.
This week, the question that we have up in the air is: will the 101.50/60 price area act as a resistance or will the US Dollar continue to appreciate? I can clearly see from the chart that a 3 corrective wave has happened, which implies that the market can continue its appreciation without creating a 5th downwards corrective wave. This week and possibly next week will be the focus point for me.
The EURUSD currency pair, after accumulating all last week, made a lower move on Friday after the NFP data release. In the London Live Trading Room, we were waiting all week for the downwards move, as I was expecting it from the beginning of last week, 2nd April blog (please click here to read it).
With regard to Fundamental News, we don’t have any major events coming out of the Eurozone. However, the US has fewer important data this week compared to last week and I will pay close attention to volatility in the market caused by this. I would like to remind all the traders that this week the European Market’s last trading day will be Thursday 13th April rather than Friday and it will re-open on Tuesday 18th April as it is Easter weekend.
Trade idea: The trade I am looking to take in the EURUSD is a sell off of the 1.0630 price area if a retracement happens during the first few days of the opening. Monday could be a tricky day as Yellen is due to speak at 09:00 pm UK time. If the rejection occurs, the take profit is at around the 1.0520 price area.