We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • New Zealand Finance Minister the Treasury is considering "bespoke" solutions for bigger firms needing financial assistance - BBG #NZD
  • The #Dow Jones Industrial Average sold off by as much as 38.4% from the February high to the March low, while the S&P 500 lost as much as 35.9% over the same observed period. Get your #equity market update from @JStanleyFX here: https://t.co/HkNM11G1n9 https://t.co/Tiremr0LkX
  • US equity futures pointing lower heading into Asia's Wednesday trading session
  • President Trump says we're going to go through a very tough two weeks #coronavirus
  • $EURUSD Daily Pivot Points: S3: 1.0862 S2: 1.0958 S1: 1.1002 R1: 1.1099 R2: 1.1151 R3: 1.1247 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • #DAX: Bulls have been unable to break above resistance derived from the December 2018 lows. Get your DAX market update from @PeterHanksFX here: https://t.co/dnJxJVLIOD https://t.co/X6wF8UKN87
  • 🇦🇺 AUD AiG Performance of Manufacturing Index (MAR), Actual: 53.7 Expected: N/A Previous: 44.3 https://www.dailyfx.com/economic-calendar#2020-03-31
  • #SP500 futures struggling here at "outer" resistance in the aftermath of taking out "inner" resistance (as expected). A descent through near-term rising support (blue line) could pave the way for a retest of current 2020 lows. Taking out 2634 may otherwise precede further gains https://t.co/y4LtFwPodU
  • $USDJPY Daily Pivot Points: S3: 105.89 S2: 106.85 S1: 107.35 R1: 108.31 R2: 108.79 R3: 109.76 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Heads Up:🇦🇺 AUD AiG Performance of Manufacturing Index (MAR) due at 21:30 GMT (15min), Actual: N/A Expected: N/A Previous: 44.3 https://www.dailyfx.com/economic-calendar#2020-03-31
EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

2016-06-21 08:36:00
Oded Shimoni, Junior Currency Analyst
Share:

Talking Points:

- EUR/USD still contained below the 1.14 handle after gapping higher yesterday

- Draghi and Yellen headline the docket but might not generate significant movement as EU referendum looms

- GSI is a powerful big data indicator that can help you determine whether short-term trends will continue or reverse

The EUR/USD is edging slightly lower on London open after retracing yesterday below the 1.14 handle. The Euro gapped higher versus the US Dollar at the trading week open, apparently on the backdrop of polls over the weekend that seemed to favor the “Remain” side in the upcoming UK EU referendum.

The seemingly complete absorption of market focus on “Brexit” might imply that major events that can induce monetary policy speculation, such as the Fed Chair Yellen testimony and a speech by ECB president Mario Draghi could potentially have less market moving influence in the short term.

Taking this into consideration, we look to find short term trading opportunities using the Grid Sight Index (GSI) indicator.

EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

Click Here for the DailyFX Calendar

Euro-Zone ZEW survey might take a back sit as the market seems to shift and turn in response to “Brexit” induced volatility and opinion polls. The “Brexit” implications for the Euro appear to be significant, which could in turn explain why the currency’s main driver for the time being appears to be related to the “Brexit” sentiment swings.

Taking this into consideration might imply that the scrutinized speeches today by both Mario Draghi and Janet Yellen could have limited impact. The Fed’s Chair remarks before the Senate Banking Committee and the House Financial Services Committee could provide further information on the timing of future rate hikes, as the Fed projections are still not in line with market pricing (Fed Funds Futures do not price a hike at least until February 2017).

Traders might potentially hold back on clear directional bets stemming from monetary policy speculation before the “Brexit” vote.

EUR/USD 5-Min GSI Chart: June 21, 2016

EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

The EUR/USD gave back some of the Asia gains, but the GSI indicator above shows that in 45% of similar past events, the pair traded higher by 12 pips and 24 pips higher 20% of past events. The GSI indicator calculates the distribution of past event outcomes given certain momentum patterns, and can give you a look at the market in a way that's never been possible before, analyzing millions of historical prices in real time. By matching events in the past, GSI describes how often the price moved in a certain direction.

You can learn more about the GSI here.

EUR/USD Technical Levels:

EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

Click here for the DailyFX Support & Resistance tool

We use volatility measures as a way to better fit our strategy to market conditions. The trading environment at the moment seems to represent heightened possibility for volatile moves and reactions due to the upcoming EU Referendum. Indeed the market may be underestimating the “Brexit” risk to the Euro. In turn, it may imply that breakout type trades are preferable in the short term.

EUR/USD 30-Min Chart With SPX500 Overlay: June 21, 2016

EUR/USD Short Term Levels Ahead of Draghi and Yellen, “Brexit” Risks

The EUR/USD is trading at a possible resistance zone below 1.1350. Other levels of interest on a move higher might be 1.1379 followed by the 1.14 handle. If the price manages to move above that level, further resistance may be found at 1.1430 and a resistance zone at 1.1467-1.1483, with the 1.15 handle lurking above.

Level of interest on a move lower could be a possible support zone below the 1.13 handle, followed by 1.1243, and 1.122. A confluence of support levels seem to sit below the 1.12 handle.

When price reaches those levels, short term traders might use the GSI to view how prices reacted in the past given a certain momentum pattern, and see the distribution of historical outcomes in which the price reversed or continued in the same direction. We generally want to see GSI with the historical patterns significantly shifted in one direction, which could potentially be used with a pre-determined bias as well.

A common way to use GSI is to help you fade tops and bottoms, and trade breakouts. That’s why traders may want to use the GSI indicator when price reaches those specific pre-determined levels, and fit a strategy that can offer a proper way to define risk. We studied over 43 million real trades and found that traders who do that were three times more likely to turn a profit. Read more on the Traits of Successful Traders” research.

Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 42.3% of traders are long the EUR/USD at the time of writing. Retail traders flipped net short June 16, and increased shorts on the move higher, apparently trying to pick a top. This reading seems to be confirmed by the fact that short positions have been reduced slightly on the pullback lower (see the Traits of Successful Traders” research).

The SSI is mainly used as a contrarian indicator, implying a further strength ahead for the pair.

You can find more info about the DailyFX SSI indicator here

--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.