Who’s up for a day trade today? If you are, then you might want to look at this pretty cool uptrend setup on EUR/USD.
As you can see on the chart below, EUR/USD is lollygagging just above the 1.0600 major psychological area, which is also near a rising channel support on the 1-hour time frame. What’s interesting about the consolidation is that it’s also near this week’s open price while stochastic is flashing a possible bullish divergence in the making.
If you’re planning to buy the euro, keep in mind that the ECB has just rolled out its latest policy changes. Apparently, Draghi and his team will extend their QE schedule by another nine months to December even as they tone down their monthly asset purchases from 80B EUR to 60B EUR.
Meanwhile, the dollar continues to dominate its counterparts though at a slower pace than when Trump just won the Presidential elections. U.S. bond yields (and the dollar) are still finding support from both the expectations of infrastructure spending and tax cuts during the Trump administration and the expected interest rate hike from the Fed.
So while the setup above looks juicy especially for the euro bulls, it’s also a pretty risky one given that the fundamentals are against a long trade.
This is why I’m only watching the pair for now. However, I’ll also be on the lookout for possible catalysts that might push the pair higher over the next trading sessions. Maybe a profit-taking scenario before the weekend and next week’s highly-anticipated FOMC statement?
How about you? Do you have any dollar-related setups that you’re looking at today? Feel free to share!
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