Cryptocurrencies and Forex Analysis May 15th: Euro and Gold anticipating news
EURUSD, Daily timeframe
We saw a third consecutive day of positive price action on Monday. The increase was of about 40 pips. Today, there are major catalysts for action that will have an impact on the euro- German GDP for the first quarter and ZEW economic sentiment. The scenarios we’ve mapped out are:
Price may fall today in order to test the 1.1800 level. Especially with the events mentioned and with an increase in volatility, this is quite possible. After the event, provided a rejection bullish candle appears on the daily timeframe closing above 1.2000, this could be a signal to go long. Target level is 1.2500.
The euro may not retreat. Instead price action may advance further north toward the immediate level of resistance at 1.2200. Keep in mind that 1.2200 may provide a resistance. If price reacts with a drop on the 4-hour timeframe, it may be a time to go short. Target level would be 1.1900.
A fall and closure for the day below 1.1800 could attract a lot more bearish interest. Next immediate support level is the area at 1.1700 and then comes the pivotal 1.1500. Both could become a springboard for a long (we’re still in an uptrend) provided price rejects with a bullish daily candle exactly from those prices.
Gold, Daily timeframe
Not much change in the price of Gold this Monday. There was mild bullishness in the beginning of the day only for price to wane in the later afternoon hours. Pretty much gold left where it started on Monday. With today’s news events, however, this could change as there’s news from some of the large economies (the U.S. and Germany). The scenarios we’re monitoring are:
Price of the precious metal could gain value and continue to trend up. If today the candle on the larger daily timeframe closes above 1326.00, this could lead to more strength going as far as the upper band of the range located at 1350.00.
A retest could have an adverse effect on trades that have already been long the market. To prevent this from happening make sure that stop losses are wide enough to let price develop and not squeeze it but not as wide as to be unreasonable. Make sure those levels are in agreement with your risk management criteria as well. The other option is to fine-tune the volumes of your trades.
If the safe haven asset crashes though 1300.00, this might be a time to rethink the direction of our future trades. Remember, trading is not a matter of being right all the time. It is how much you are right when the trades go well, and how little you were wrong when the position is against you. Quality of trades is a priority and that is our main focus. That’s why trades are mapped out on the daily horizon- to clear the noise that is characteristic of the lower timeframes such as the 1-hour and 15 minute timeframes.
Bias: Bearish, Daily timeframe
Bitcoin ended Monday on a barely noticeable change. Price closed the day at almost its starting point for the day. The difference in price action was more visible on its crypto counterpart, Ether. The market is still in a downtrend and until certain levels get exceeded by price, we would be looking for signals from specific places to go short. The market developments monitored are:
If the market resumes bullishness and strengthens to trade above $9,500, that would be a sign for previous retracement levels to be potentially tested. These levels are $10,000, $12, 000 and $13,000. Remember, those areas are in-between points and could provide only short-term opportunities for trading. Do not hold onto short-term trades for too long so that the market doesn’t take back what has been made as a profit.
If the market falls again and is driven by the short interest of big players plus increased levels of volatility, we could have more chances to go short in direction of the downtrending market. The immediate target and support level that we’re targeting is $5,800. If that support gets broken, hold onto your shorts, there could be a lot more negative sentiment flooding the market.
A break and closure above $13,000 would turn the situation around. This would be a moment of reversal where from a downtrend, we would again find ourselves in a bullish environment. After that point, the bear trend would be potentially over and bulls would take their place instead. Only long trades to be initiated above that area. Target is the peak at $19,400.
Bias: Bearish, 4-Hour timeframe
Ether pushed higher on Monday and is currently flirting with the resistance at $740. We will need more definitive price action before deciding which way to go and how to respond. The three scenarios that are part of our plan are the following:
If Ether breaks out and closes the day above the resistance we discussed, then there would be more reasons to actually go long. This would be in case we’re willing to aim for retracement levels on the way up. First one in sight is $860. If price doesn’t reject it but surpasses the resistance instead, then next in line would be the target at $1,000 and then $1,180.
Price action may resume its weakness by respecting the $740 resistance level and closing the day considerably below it. This would be the time to go short and that activity would also be in line with the established bear trend. Target level is the support at $600 and then if that level gets smashed by price, next comes the farthest support at $360.
Should the support at $360 see adverse forceful break from price with closure for the day below it, then we might have to prepare ourselves for a massive sellout coming up. Traders could hold onto short trades from that point lower for as long as they last (until a potential reversal comes into play).
Wishing you Happy and Successful Trading!
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