Open Account Trading Carries Risk

EURUSD is up on the news that the far-right failed to win the first round of French elections. Macron winning the first round is clearly important for investors who want to see a continuation of the recent economic policies in France. Stock markets have been under pressure as bond yields keep ticking higher. The 10-yr US Treasury is currently yielding 2.72% a level we’ve last seen in January 2019. Measuring from the London open on Friday NZD and JPY are the weakest currencies while the dollar is in the lead. While the rally in the yields supports the dollar it’s putting pressure on risky assets including commodity currencies. This helped GBPNZD to move to my second target level resulting in yet another successful trade idea. This week traders will focus on central bank meetings and US inflation data (CPI and PPI) as well as on the French presidential elections. In today’s report, I cover GBPNZD, EURGBP and USNGAS. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.

The way I have structured my analysis is that I will post trade ideas when I see them but when now apparent trade ideas stand out at the time of writing the analysis I will provide you with analysis and key price levels on markets that are worth putting on a watchlist. As soon as something catches my eye I will update you on our Telegram channel

I tend to include Target 1 (T1) and Target 2 (T2) levels (or ranges) so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level.  While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets. If you need help more help with your trading join me at the next live analysis webinar here: www.TIOmarkets.com/webinars I will show you live how to analyse the markets and identify trading opportunities.

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GBPNZD 30 min chart 04 11

GBPNZD took a breather last week after hitting my T1 level. Now the pair has also hit my T2 level (at 1.9058) after I wrote on Friday the 1.8943 support level was holding this far and bulls were trying to push the pair higher. The uptrend is still in force above 1.9022. What we have now is a rally from the level towards the recent high at 1.9098. The appetite for risk in the markets, in general, is souring (stocks selling lower), so in the medium term, this market has not lost its upside potential. Alternatively, a break below 1.9022 would be a sign of weakness. On a decisive break below the level, GBPNZD could correct to 1.8985.

EURGBP 1h chart 04 11

EURGBP didn’t reach the T1 level on the first attempt and fell down to the level I highlighted in the alternative scenario (here). The pair turned around from 0.8307 on Friday and has been rallying strongly ever since. Now the market is only 0.10% away from my Target 1 level at 0.8385. It looks highly likely that EURGBP will now trade to and possibly through this level. Alternative scenario: Upside momentum is lost and the market trades down to the 0.8355 – 0.8365 range where we have the 20 SMA and the rising channel low.

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USNGAS 30 min chart 04 11

USNGAS rallied back to October 2021 highs on Friday and stalled there as profit-taking started to soften the bids. I have been bullish on this market since the war started and have been providing trade ideas on the long side. Now though it’s time to be careful and just take profits on existing long trades or possibly look for shorting opportunities in this market. The upside risk remains though and therefore it’s good to keep the trade sizes smaller than usual and targets close. The market has been weakish after hitting the 6.522 resistance which means we have to pay attention to the manner the market trades around the 6.290 support level. If the level is broken decisively, look for a move to 6.22 and possibly deeper. If the level (6.29) holds then we’ll probably see the market trading to levels between the 50-SMA at 6.39 and a recent minor high at 6.380.

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Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.

The Federal Reserve Several FOMC members support 0.5% rate hike in May. The Fed is prepared to taper by $60B of treasuries and $35B of mortgage back securities per month.
Stimulus The Fed is looking to scale down its bond-buying program (QE) but has signalled that it be careful with tightening due to the war in Europe.
Yields The US 10-year treasury yield has risen to 2.187% as investors sell the bonds and adjust to the expected rate hikes.
Employment The March non-farm payrolls increased by 431K while the analyst consensus had predicted 492K new jobs. The unemployment rate dropped to 3.6% and average hourly earnings were in line with expectations (0.4% vs. 0.4% expected).
Inflation The annual headline inflation reading for January came in at 7.5% (7% prior). This was the highest CPI print in 40 years. The core CPI (all items less food and energy) was confirmed at 6.0% (5.5% previous).

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 The Next Main Risk Events

  • EUR – ZEW Economic Sentiment
  • EUR – German ZEW Economic Sentiment
  • USD – CPI & Core CPI

For more information and details see the TIOmarkets economic calendar here

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

Open a VIP Black account now at TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: TIOmarkets VIP Black. For more details on this truly exceptional offering see here. For more analysis and commentary, visit our YouTube channel where you can find market commentary videos to support your learning and growth as a trader. 

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DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analyzes and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated. 

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