We hope you have weathered yesterday's roller coaster ride well. Donald Trump's first news conference since July caused quite a stir in the market while the market's response was both uncertain and disappointed. Market participants still have to get used to the different approach and behaviors of President-elect Trump. His statement can be described as somewhat muddled as he addressed six topics in three minutes at the start of the press conference, trying to cover as many topics as possible. The particulars for the economy, prospective fiscal stimulus and Trump's position on general U.S. trade policies, the details which concern traders and investors, were not addressed in the press conference. Traders who have hoped for more details on Trump's policies have thus been disappointed and gave up on dollar long positions. The euro's and pound's upward moves reflect that profit taking in dollar positions after investors got no further insights into fiscal stimulus or tax policy.
EUR/USD
The euro surged from a low near 1.0450 to a high of 1.0623. While our daily short entry provided a good profit before the short squeeze in the EUR/USD, the breakout below 1.0480 proved to be a fake-out. Looking at the daily chart we see a symmetrical triangle which predicts upcoming breakouts to either side. Above 1.0630 the euro may head for 1.0670 and 1.07. However, we bear in mind that the overall downtrend is still intact and that dollar bulls may jump back in at higher levels, pushing the pair back to lower levels. The recent upward movement is therefore on a very shaking footing. Based on the technical triangle, a renewed break below 1.0470 may spark fresh bearish momentum.
GBP/USD
The cable's trading range was extended to 230 pips following yesterday's market turmoil. Short traders were able to pocket a good profit while the bullish momentum ran out of steam towards the end of the trading day. Whether we will see a continuation of the recent upward correction remains to be seen and hinges on the appetite for U.S. dollars. If dollar bulls jump back in, buying USD at lower levels, the 1.2230-level could prove as a resistance. If the pound climbs above 1.2250 (the falling trend line) we see a next crucial resistance level at 1.2275. Above 1.2275, chances are that the pound rises towards 1.2350/80. Current support levels are however seen at 1.21 and 1.2020.
Here are our daily signal alerts:
EUR/USD
Long at 1.0670 SL 25 TP 30-40
Short at 1.0570 SL 25 TP 25, 50
GBP/USD
Long at 1.2275 SL 25 TP 20, 40
Short at 1.2165 SL 25 TP 20, 40
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.
