Photo - Andreas Zanin
Andreas Zanin
Analysis | October 19, 2021

KTM FX Weekly: Testing the 100MA-monthly again

Lower low and lower high patterns continue to print on the weekly chart. But dip buying is pushing the price a bit higher on the past two occasions. Finally, we are now finally entered the support level of 0.8400; it’s 100MA monthly.

Since July 2016, six times the 100MA pushed the price higher. Now we are sitting at the seventh time. Losing the key 100MA will be more painful to the bulls. In this case, 0.8280 is the immediate target to focus on. The level 0.8250 is the 161.8fe A-B-C corrective wave structure.

Shifting to the daily chart, the daily indicators suggest we are going to re-test 0.8470-0.8500/0.8520. A decisive breakout above 0.8520 would allow the price to strengthen its wings-but how far?

The pound continues to bid against the euro on rising expectations of rate hikes sooner than expected.

It seems the Sun never rises on the euro cross as selling pressure continues from the 1st day of the new month. Straight six days downward trend was recorded for the third time as per the available historical data.

The week ahead, Wednesday’s UK CPI and Friday’s EA Flash PMI are the key drivers to the cross.

So far this year, the EUR traded as a funding currency. So, to change the EURGBP direction, the EUR has to be an investment currency.

 

So, what makes EUR an investment currency? 

Credit Agricole said, “The transition to a less accommodative policy in the Eurozone can be positive for the EUR if the ECB transforms some of its monetary easing tools (e.g., PEPP) into credit easing tools – e.g., similar to the OMT or the SMP backstop facilities that were used to fight the Eurozone sovereign debt crisis. In this way, the Governing Council could be able to reduce its monetary stimulus without triggering an unwarranted tightening of the Eurozone financial conditions. In turn, this could make the EUR a less appealing funding and more attractive investment currency.”

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts

Latest Article
Improve your trading with a True ECN Broker
Trading account overview