The Euro Retrace Continues This Morning, Discovering New Trades
Skerdian Meta • 2 min read
Last night when I went to bed, the Euro was trying to put up a fight. It was close to the 20 simple moving average (20 SMA) on the H1 forex chart and the stochastic indicator was oversold, so I thought that this retrace might be over.
Yesterday was a big day for the Euro sellers because the 1.07 support level in EUR/USD was finally broken and the price fell to the lowest level of the ear. But these moves rarely unfold in a straight line, there are always bumps on the road and there will always be retraces and pullbacks.
One of these retraces is taking place this morning, with EUR/USD moving back up above the 1.07 level and into the 1.0730 region. The price action in this forex pair is ignoring the Eurozone officials/politicians.
The 20 SMA might be a good place to sell this pair.
The ECB member, Mersch, is trying to reassure the market that the loose monetary policy will continue for some time to come. He said in a speech this morning that the current monetary policy and low interest rates are still appropriate since the European recovery is slow.
The Italian Prime Minister, Mateo Renzi, also said a while ago that he will resign if the Italians don´t vote to change their constitution. In my honest opinion, these changes have been long overdue since they give more power to the PM and the central government. We know the Italian governments have been changing every quarter since WW2 because they have been very weak, so these changes are more than necessary.
Anyway, Renzi is behind in the polls so this should be negative for the Euro, but EUR/USD is still retracing, which is presenting us with some good trading opportunities. Right now, the price is just below the 20 SMA, as you can see on the H4 EUR/USD chart. This looks like a good place to open a short term forex signal, which I´m not sure if we will take. Still, it´s another trade idea for you guys if you are up for it.