Intraday Trading 07.22
|The EUR/JPY looks to break above the upper trend of the descending channel which has remained intact since the middle of the day on Tuesday. Failure to break above this level may expose downside risks towards 110.8, while a break above 112.0 may validate upside price action towards 112.82. Indeed, we may see increase volatility ahead of the ECB stress tests results due out tomorrow. However, as optimism regarding the outcome continues to gather momentum, we may see the pair test 112.82 over the next couple of hours. At the same time, there is major support at the 20-day SMA. However, traders should caution holding onto a long position ahead of tomorrow’s highly anticipated announcement.|
|The Australian dollar is the best performing currency against the greenback today, up some 1.64 percent. Going forward, I will look for a failure in the AUD/USD to break above the 200-day SMA at 0.8968. If price action tests this level, a short entry at 0.900 may suffice as market participants are likely to witness a flight to safety in all asset classes if the European stress tests fail to show that banks have enough capital to withstand another shock to the financial system tomorrow.|
Retail positioning relates to our speculative sentiment index which illustrates where traders are at in the market. The larger the retail positioning circle is under the chart, the more likely it is that longs exceed shorts or vice versa. We will look to use this indicator in conjunction with other technical developments to dictate price action over the next 24 hours.
Every day at 16:00 GMT, we analyze potential 24 hour trade set ups. If the trade is indeed triggered we will automatically place a stop at breakeven to control any unforeseen losses. This break-even level is illustrated by the horizontal line on each graph. The trade is no longer valid if it is not triggered by 16:00 GMT the next day. Good luck trading!
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Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.