Six ways to invest in Europe right now
COT Report last week offered some interesting positioning on what was a rather choppy week of trading which resulted in risk on Thursday, risk off Friday.
As experienced traders often know, Tuesdays and Thursdays often turn out to be good days to look for trading opportunities; last Thursday offered good value for lots of short options which played with current trends.
Over the weekend, Chinese data pointed to stronger PPI data, but weaker Retail Sales could weigh on the Aussie early in the week. Technically the stronger PPI could offer a boost to the pair, but mixed data might provide further downside later on.
We didn't see a lot of follow through last week with the key risk events of Super Mario on Thursday and the NFP on Friday. If we see follow through this week, we could easily see a push lower.
We shall therefore look for short opportunities across key pairs, including NZD/USD and EUR/USD. We also like the potential for USD/CAD to offer a rectracement short.
Key week for US and Aussie/Kiwi data this week.
EUR/USD
The euro had a really interesting week last week, first half was pretty quiet with Thursday offering a push higher before NFP and Dollar strength pushed the pair back down again with minor profit taking on Friday night.
Our long term Bias system is pointing to further downside in the pair, although short term highlights a potential bounce.
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COT report and weekly chart looks Bearish and we therefore like looking for further short opportunities in the pair.
Personal Bias: Bearish
Support: 1.3000
Resistance: 1.3100
Strategy: Look for short opportunities on any failed tests of resistance.
GBPUSD
The pound remains weak, with further downside potential. We do sit at extremes in the RSI and could see a push back the 1.500 handle initially. We do however maintain out outlook towards the 1.4800 level therefore our outlook strategy remains consistent with last week.
Personal Bias: Bearish
Support: 1.4800 (monthly support)
Resistance: 1.5000 / 1.5190 / 1.5370
Strategy: Look for sell signals on any retracements higher.
AUD/USD
Following some rather choppy movement last week, we maintain our Bearish outlook for the pair. Our in-house Bias system is continuing to show short potential with the order book being chopped and cleared last week.
We are currently siting at a support level on the weekly charts and could again bounce higher before a move lower. Therefore the NZD/USD might offer better risk reward options.
We currently hold a short position.
Personal Bias: Bearish
Support: 1.0200
Resistance: 1.0285
Strategy: Holding short.
USD/JPY
The yen continues to look weak; we can't remember (or find for that matter) a time when weekly charts hit such extremes on RSI and Stochastics. We would rather look to Buy on retracements instead of jumping long at extreme levels.
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Personal Bias: Neutral
Support: 94.50
Resistance: 100 ... maybe
My Strategy: sidelined - wait for clear entry signals.
USD/CAD
The pair could offer potential short options if we get a retracement. Close of Friday was Bullish, so its key to wait for clear signals. For the long term we remain USD/CAD Bulls for the time being, but suspect it is due a retracement as the order book is at extreme levels.
A safe move would be to wait for the retracement to enter this pair long again. However, those a little more risk tolerant could look for a counter trend trade short towards the 1.200, 1.170 mark; key to counter trend trade is to get a clear short signal.
NZD/USD
The kiwi could offer an alternative to the Aussie, but it remains as choppy. In house RTAS system turned to net Bearish last week, however strong support comes in below. We like the idea of shorting this pair on retracements higher with clear signals short, and used this same strategy to book some profit last week. That said, this pair remains with strong support and resistance, so trading could be rather choppy.
A potential strategy could be to look for short signals from the 0.8250 level with stops above 0.8300. The pin bar last week on Wednesday offered
great short options.
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