2015-05-11

EURUSD

The strengthening of EURUSD on the daily chart slowed down because of the increasing risks on the debt repayment by Greece. On Tuesday Greece must pay 750 million euro to the International Monetary Fund. According to our analysts, the successful debt repayment might bolster further the euro and vice versa. Market participants estimate the Greece default possibility at 25%. Later, on Wednesday we expect the release of important macroeconomic information in the EU: Q1 GDP and Industrial Production in the euro zone in March, as well as the similar indicators for Germany and Italy. According to forecasts, the European GDP is expected to grow, and the German GDP is more likely to fall. US Retail Sales in April are also expected to be published on Wednesday. The tentative outlook is negative. 

At the end of April EUR/USD:D1 finished the sideways trading and moved higher. Now there is a pullback and the price is close to the previous resistance line, which has currently become the support level for a new uptrend. RSI-Bars are located in overbought area and are also showing signs of retracement. The downward bias of the moving average (200) is decreasing. We deem that a bullish momentum might be formed after the price rising above the upper Donchian Channel boundary and the last fractal high at 1.1387, or crossing down the upper boundary of the previous range and the last fractal low at 1.105, in case of a bearish momentum. Let the market choose the price movement scenario. Two pending orders can be placed: when one of them is activated, the other can be canceled, since the market has chosen the direction. After pending order placing, Stop loss is to be moved every four hours to the next fractal high (short position) or fractal low (long position), following Parabolic signals. The most careful traders can switch to the H4 timeframe after order execution, placing Stop loss and moving it according to the price direction. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the Stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not considered.

BOE: Official Bank Rate

Today we examine the price activity of the GBP/USD currency pair on the H4 chart. The price approached the daily resistance line and entered the consolidation phase. In this case the most unambiguous signals are coming from the RSI-Bars oscillator. Note that the current bar has already crossed the last low (see red ellipse on the figure). It certainly tells us about the strengthening of the bearish sentiment ahead of the Interest Rate Statement released today by the Bank of England (13:00 CET). 

Note that the daily resistance at 1.55533 was confirmed for three times and, thus, can be a reliable level of risk mitigation when going short. This level importance is also proved by the upper Donchian Channel boundary. We expect that the closest to price resistance of the RSI-Bars will serve for support level. It means that conservative traders should wait for the breakout of this level to confirm the bearish sentiment. A pending sell order may be placed below 1.53543. The breakout of this mark is likely to lead to the cross-over of the assumed RSI support. Stop loss is to be moved every day to the break-even point, placing it above the last high (trend-following strategy). Thus, we are changing the probable profit/loss ratio to the breakeven point.