Alpesh Patel's NEWSLETTERPRO – Busy week ahead for the currency market, what to expect from key events

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MORNING BRIEF

This is going to be a very busy week for currency traders across the world as significant news announcements are expected from Europe and the US. But before that, let’s go over what happened in Friday when the Dollar remained pretty much unchanged against the other major currencies. The Euro and the Cable reached 1.3700 and 1.6200 respectively after the massive sell-off in Dollar-long positions on Thursday. Now, coming to the week ahead of us, today we don’t expect increased volatility in the markets due to the fact that it’s Monday and most importantly due to the unique mid-week Non-Farm Payrolls announcement scheduled for tomorrow. It is unusual to have an NFP announcement mid-week and this event could be very important for the week ahead as markets will have plenty of time to react on any potential surprises from the job market in US. Usually the NFP figures come in Friday and the weekend after them acts as a natural barrier for markets to cool down and react normally on Monday but this time is different. Turning our attention to the Pound, the BoE Minutes release on Wednesday and the Q3 GDP on Friday could potentially be market-movers for the British currency. Cable is near a medium-term high at 1.6270 and a surprise print in either events could either shoot the currency higher or cause a deep retracement. We will expand on this as the week progresses, for today we expect mild repositioning across all major pairs as traders prepare for tomorrow’s NFPs.

Nothing major on our Calendar today

The Economic Calendar for the day is empty of major announcements. Later in the day, at 15.00 the US Existing Home Sales might hint us on the conditions in the housing market in the US but we definitely don’t expect any major reaction from the US Dollar to that printing as traders are focused on tomorrow’s labor data event.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

15.00

USD

Existing Home Sales

Medium

-3.3%

1.7%

 

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TECHNICAL ANALYSIS & LEVELS

EUR/USD

Euro remained range-bound on Friday after having reached the 1.3700 mark. For the day we don’t expect it to break out of this tight range however we need to be prepared for the event that it does. Should the pair climb above the 1.3700 mark then a long entry is advised with targets coming at 1.3725 and 1.3770 and a stop placed below the 1.3645 area. On the other hand, should the pair break below the 1.3650 support then we would like to enter short, target the 1.3630 and 1.3590 areas with a stop just above the 1.3700 resistance. Given the fact that tomorrow we have the unusual mid-week NFPs we would advise that should you take these trades you do that with a reduced trade size, probably half than usual.

GBP/USD

Same as the Euro, the Pound has formed a ranged formation between 1.6140 and 1.6220 on Friday. We expect the Pound to remain trapped in this range for the day but again we would want to be prepared to take any trades should this formation breaks. We favor a long entry just above the 1.6230 mark with targets at 1.6275 and 1.6350 and a stop below the 1.6140 support. In case however the Pound exits the formation with a downwards break of the 1.6140 support then we will definitely join the move lower and enter just below the 1.6140 area, target the 1.6090 and 1.6010 marks and place a stop above the 1.6225 resistance level. Again, please enter these trades should they trigger but limit your trade size to a half of your usual size.

FTSE 100

Regarding the FTSE 100, the uptrend continued on Friday as the index has reached the 6,630 points area and prospects remain bullish. We are committed to our long trade since last week, we are targeting the 6,700 points area but since the index has gained some distance from our first target at 6,600 we would like to move our stops from the breakeven price a bit higher to lock in some more profits. We will place our stops just below our previous first target, around the 6,995 area to prevent ourselves from leaving significant profits on the table should the index retrace lower. We remain bullish on the trend and since other European indices are opening higher for the day as this report goes to press we are optimistic over this trade.

Gold

Gold seems to be in an uptrend that has halted ahead of the very important $1,325 level and is forming a sideways move between that level and the $1,303 area. We would like to jump into a trade as soon as this sideways move ends and Gold breaks either above or below the range’s boundaries. So we will enter long if Gold manages to clear above the $1,328 area and we will target the $1,342 and $1,367 levels, having put a stop below the $1,302 support. On the other hand, should the yellow metal break below the $1,300-02 area then we favor a short trade with targets the $1,289 and $1,265 marks, with a stop above the $1,328 level. We would advise that you be extra careful with Gold due to the unusual mid-week NFP event tomorrow that could provide extra volatility to the already volatile commodity.

All charts have been created using FXCM’s Trading Station platform.

This is the free, time-delayed version of NewsletterPro, a subscription-based product.

If you would like to receive it before 7:30am, please visit InvestingBetter.com to subscribe.

 

 

 

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