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.