By Alpari
Yesterday’s Trading:
The calendar was empty on Tuesday, so the euro/dollar headed unhindered to the 90th degree. My yesterday’s expectations were fulfilled in full, but the daily closed with a hammer after there was a bounce from 1.0673.
Main news of the day:
- 11:30 EET, UK labor market data: number of unemployment benefit applications for October, ILO unemployment level; average earnings level, September employment creation;
- 12:30 EET, BoE’s Mark Carney to speak;
- 15:15 EET, ECB’s Mario Draghi to speak.
Market Expectations:
The hammer means that there’s a upward correction to 1.0830. The signal for a strengthening of the euro is already active. There is just one little thing: the bulls have met the trend line. To get past it, the euro needs to rebound to 1.0716. The bounce will allow for the indicators to unload.
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Wednesday is also bare from a news point of view. Although, Draghi and Carney are set to speak. If they don’t mention monetary policy, the low market volatility will remain until tomorrow. Today is a holiday in the US, so it would seem silly to risk opening new positions. The market could swing on UK labor market data.
Technical Analysis:
- Intraday target maximum: 1.0775, minimum: 1.0715, close: 1.0740;
- Intraday volatility for last 10 weeks: 119 points (4 figures).
The euro/dollar has renewed from a minimum of 1.0673 to the trend line. A hammer has formed on the daily. This means that the risks of a deep correction are there. The holiday in the US could cancel the bull signal. As we know, on a thin market like today it’s easy for stops to be set off above 1.0790. On my forecast I’ve gone for a return of the rate to the 45th degree and then a sideways until Thursday.