Matt Simpson, CFTe, MSTA
CityIndex
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EUR: German business climate peaked in February, and expected to soften further today to its lowest since Jan '13. This leaves an upside surprise should it come in stronger, but several other indocators are pointing to a weaker Germany so this is an outside chance. With EURUSD rising throughout Asia it may provide an opportunity to get short before the release, in hope of a poor data set.
TECHNICAL ANALYSIS:
USDCAD: Grinding higher, but a trend is a trend
I admit the trend is quite messy - but it remains to be a trend as it produces higher highs and lows. 1.118 may be the swing low which produced a wide-ranged Rikshaw Man Doji and has produced 2 more indecision candles well within the range of the Doji to suggest a basing pattern is taking shape.
Any retracements towards this key level may produce a decent buying opportunity with a relatively high reward to risk ratio.
However in regards to targets I am erring on the side of caution as we have seen USDCAD has the tendency to be volatile whilst lacking direction for several days at a time. Therefor I am opting for a target around 1.129 (last week’s highs) and not attempting to get any home runs.
With FOMC and FED taking up the headlines this week, with any luck we can exit the trade before these events occur.
GOLD: Range trading strategies preferred
The recent H4 candle has produced a Bullish Hammer above the prior swing low to suggest the potential for a Double Bottom (confirmed with a break above $1234). However whilst we remain below this key level then traders are likely to opt for range-trading strategies by shorting below resistance or buying above support.
If we do see an upside break of $1234 then we could consider bullish setups above this level, and hope for a retracement to seek long positions. However take note of resistance at $1237 which may scupper the chances of the Double Bottom reaching the $1240 target.
EURUSD: Over to Germany
The markets are really waiting for comments from FED and FOMC so I don't expect any particularly big moves today. However is the data comes in weak enough for EURUSD it should help push it back down to 1.266 to undo the bulls work during Asia.
Any surprise strength from Germany should see EURUSD up to around 1.27 but to stay here we'd also need poor housing data from US.
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