We are focusing on the EURUSD which has revisited the inverted head and shoulder line. The initial BUY stop position is going to remain at the current level. However we are also going to add an additional position now at a lower entry point.
DXY 4 Hour Chart
As long as the DXY does not break above the 93.20 resistance we can assume the head and shoulders formation is still in play which indicates a bearish move.
EURUSD 4 Hour Chart
Trade Setup 1: BUY, market execution, current price 1.1782, stop loss 1.1712 and take profit target 1.2000
Stop loss: 70 pips
Take profit: 218 pips
15th September Analysis – Trade Setup 2
Good evening team,
Frustrating moves on the DXY overnight with a whipsaw price action. Fundamentally, the second miss on inflation last night should have provided a bullish sentiment for equities and a bearish sentiment for the USD. However, the DXY reversed unexpectedly. Next week the FED meets for a two-day meeting to discuss the economic outlook and we see the possibility of a weaker USD leading into the event. As we know, Jerome Powell generally tries to cool any concerns in the market by downplaying inflation concerns. He has spent the last 12 months pumping the stock market to record highs, therefore it is unlikely that he will be the reason it falls. Therefore, the USD could begin to see some downside leading into the event.
EURUSD – Daily Chart
The technicals are showing a declining channel formation, and there has been a strong impulsive bounce on the 1.1750 support. This support zone also sets up an inverted head and shoulders structure which would indicate a possible breakout above the declining channel trend line resistance. This also lines up with the DXY head and shoulders formation.
EURUSD 4 Hour Chart
Trade Setup: BUY STOP – Entry price 1.1845, stop loss 1.1770 and take profit 1.2000
Stop loss: 75 pips
Take profit: 160 pips
We are being careful with the positioning in this setup. I’d like to see some more upside before the trade is activated. On the bearish side, if the DXY continues rallying and the EURUSD breaks the 1.1750 support, there could be a large leg to the downside coming. So we will be prepared for both situations.