The USD has taken a beating in the last few days. As we mentioned in the previous market update today, there might be a number of reasons responsible for that, such as: the FBI re-opening investigation about Clinton´s emails, Michelle Obama removing all Clinton related tweets, Trump closing in on the presidential race, negative market sentiment, etc.
It might as well be none of these reasons; maybe the forex market just feels like dumping the Buck and buying the safe haven currencies, just in case.
We had a tough time during this risk aversion sentiment in the market because this came out of the blue, which makes it easy to get caught in the middle. At least it´s the beginning of the month so we have plenty of time to make up for the last two days.
However, this rush for safety has brought forward some good long term trading setups. We haven´t been able to open long term forex signals in more than a month because the price in most major forex pairs was in the middle of nowhere, but this latest move has taken a few forex pairs to some long term support/resistance levels.
USD/CHF, for example, looks very attractive since the price is just above the 200 moving average on the daily forex chart and the stochastic and RSI indicators are already oversold. But, the Swissy is an important safe haven currency, so if anything goes wrong in the US election which is coming up, then no one will care for the technical levels.
The stochastic indicator is already overbought
We decided to stick to EUR/USD instead. This pair has been in a downtrend since mid-August, mainly due to the rhetoric from the ECB (European Central Bank). But in the last few days, as we can see from the daily forex chart above, this forex pair has moved higher close to 1.11, which offers some sort of decent resistance. Besides that, the stochastic indicator is overbought and RSI is catching up too.
You might argue that there´s still some room to go, probably until the price reaches the group of moving averages which are tangled up together around 1.1150. That´s true, but the price is not too far away from that level and we have missed quite a few good opportunities for long term forex signals for this reason. Therefore, we decided to enter a bit early this time and if the price moves further up, then we will consider opening another signal higher.