Good evening team,
A pretty large risk off move can be seen across global equities, however I am of the opinion this is just a pull back at the moment. The reason being is due to safe haven currencies staying in low demand (USD and JPY). Risk on currencies like the AUD, NZD and CAD are all maintaining their strength against other currency pairs. If we were looking at a major trend change or market down turn we would see a risk off move across the full currency market. We are tracking a reversal on the USD and US equities at some stage in the near future, however based on the DXY technicals we see another possible push to the downside.
With that in mind, we are looking to add a position to our initial EURUSD long trade that is currently in the green.
EURUSD – 1 Hour Charts
BUY STOP – Entry Price 1.2180, stop loss 1.2120 and take profit 1.2300
Stop loss: 60 pips
Take profit: 120 pips
If there is a surge back into the safe haven currencies and the USD strengthens over night, we could be looking at a major trend change meaning we will be looking to close out the EURUSD long positions. Please see a couple of the key charts we are watching below and are looking to potentially trade over the next week.
SP500 – Daily Charts
The SP500 price action is beginning to get thin between the rising wedge formation. We can see a key trend line coming into play and providing some support. Jerome Powell testifying infront of Congress will no doubt provide some volatility. Generally speaking Jerome Powell is very cautious when it comes to the market, he tends to give the market what it wants to hear.
USDCAD – Daily Charts
The USDCAD is possibly coming towards the end of this trend. If inflation and interest rates continue to pick up in the US we will most likely see a rotation back into the USD. Therefore the USDCAD will provide a long opportunity. We will be waiting for a breakout here to take the buy side.
EURNZD – Daily Charts
Very similar to the USDCAD setup. Price action is becoming very compressed on the EURNZD. We will be waiting for long opportunities. If the EURNZD breaks to the upside this will most likely come from a risk off market sentiment.