Trading ideas - AUDUSD long in good shape, profit taken on GBPUSD trade
|Fed target rate is likely to be left unchanged today, while the statement should continue to point to further gradual rate hikes. When the Fed does raise its target rate by another 25bp, most probably in December, it will most likely lift the interest on excess reserves by less than 25bp in order to push the effective fed funds rate back to the middle of the target band; the same approach it used in June. There is an outside risk that the Fed will deal with this issue already at this week’s meeting by cutting the interest on excess reserves by 5bp to 10bp. However, we think that such a move is extremely unlikely as the Fed does not want to send the wrong signal about easing the policy stance. In addition, the committee will use the meeting to discuss the target size and composition of its balance sheet.
EUR/USD has seen some support from the result of Tuesday’s US midterm elections, closing around 0.3% up on the day. We do not expect an immediate change in US trade policies or an infrastructure program as a result of the Democrats winning the House. With the US trade tensions likely to dominate the medium-term picture, and following the recent deterioration of eurozone PMIs, we think a convincing rebound in sentiment surveys would probably be needed for EUR/USD to stage a significant recovery.
MyFXspot.com trading strategies:
EUR/USD
Trading strategy: Long
Open: 1.1420
Target: 1.1570
Stop-loss: 1.1345
Recommended size: 2.67 mini lots per $10,000 in your account
Short analysis: EUR/USD bulls suffered a setback when a long upper shadow was left Wednesday's doji (indecision) candlestick line. While the daily tenkan line continues to prop up the market, there is a good chance of another recovery attempt. We remain long.
GBP/USD
Trading strategy: Buy
Open: 1.3010
Target: -
Stop-loss: 1.2910
Recommended size: 1.50 mini lots per $10,000 in your account
Short analysis: Profit taken on GBP/USD long, earned: 200 pips, $300 per $10,000 in your account. We saw new reversal high at 1.3176 on Wednesday and softer start on Thursday. We have placed another bid at 1.3010.
USD/JPY
Trading strategy: Buy
Open: 112.95
Target: -
Stop-loss: 112.35
Recommended size: 2.84 mini lots per $10,000 in your account
Short analysis: The USD/JPY found support on Wednesday just ahead of the daily cloud top, now at 112.94 and has since rebounded. Scope grows for gains to the 2018 114.55 peak, posted in October. There was a brief break of the 113.80 Fibo, a 76.4% retrace of the 114.55 to 111.38 October fall, but bulls now need a daily close above. We have raised our bid to 112.95.
USD/CAD
Trading strategy: Short
Open: 1.3120
Target: 1.2920
Stop-loss: 1.3220
Recommended size: 1.96 mini lots per $10,000 in your account
Short analysis: The Canadian dollar edged higher against the USD on Wednesday as the greenback broadly fell after U.S. congressional elections, but gains for the loonie were tempered by lower oil prices. Canadian purchasing activity expanded at a faster pace in October as measures of employment and inventories rose, according to Ivey PMI data. The seasonally adjusted index rebounded to 61.8 after having slumped in September to 50.4, its lowest in more than two years. We remain short.
AUD/USD
Trading strategy: Long
Open: 0.7220
Target: 0.7420
Stop-loss: 0.7120
Recommended size: 1.50 mini lots per $10,000 in your account
Short analysis: Our long is in good shape. Bull sentiment is elevated as the daily cloud top is cleared, a new high is set and RSIs continue to provide a bullish tailwind. We expect a test near the 200-day moving average and July high.
EUR/GBP
Trading strategy: Await signal
Open: -
Target: -
Stop-loss: -
Recommended size: -
Short analysis: A new trend low keeps bear sentiment intact but the pair still has to contend with support into the 0.8680 area and daily RSI is near oversold. Monthly techs are bearish as RSI has plenty of room before being oversold. Selling a rally is likely prudent but we will stand aside until clearer signs appear.
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