20 July, AtoZForex — Following our Live Forex market discussion, Yagub Rahimov, Strategy Director at 7marketz Inc., has questioned Adamos Anastasiou, Head of Brokerage at FCMForex, further about the trade opportunities in the market. In relation to topic of discussions of the previous article, the technical analysis is focused on GBPUSD, USDTRY and EURUSD. In overall, this Forex trade opportunities discussion reveals great insights into the market, as it encompasses a mixture of fundamental and technical analyses.
GBPUSD short opportunities
Yagub: The first currency we’re going to discuss is GBPUSD. We should look into the overall Brexit news and the other major events. Despite, the fact that the fear is fading away, why is it that the cable appreciated and what are the trade opportunities?
Adamos Anastasiou: “Yesterday, the inflation data came in higher than expected. This has decreased the possibility of the BoE to cut rates further. Nevertheless, the Brexit is going to happen, as the new UK PM has appointed Boris Johnson as the foreign minister. It has been close to a month, since the EU referendum and the Brexit fear has been fading. Based on this, we have seen that the investors were unloading their short positions.
On top of this, we also noticed new buys coming in, while GBPUSD has recovered to 1.3487. It made this recovery, slightly above the 23.6% of the Fibonacci retracement levels. For today, we look into the Claimant Count Change and the Unemployment Rate. Keep in mind that today’s data releases are for June, the main month of the Brexit and Bremain campaign towards the EU referendum. Therefore, it is likely that the releases will be negative, which will weight further on Cable. Based on these expectations, I foresee the GBPUSD to break the support at 1.3064, which could provide some GBPUSD short opportunities.”
Yagub: Based on the head and shoulder formation that potentially we are seeing, do you actually expect the GBPUSD to hit the 1.2970 and 1.2880 level?
Adamos Anastasiou: “I would expect the first support at 1.30 for GBPUSD, which is also the psychological level. About the 1.2970 level, it is possible. Especially, now there is a lot of volatility, which could see cable to penetrate the psychological support at 1.30 and afterwards hit the 1.2970 level. Once, GBPUSD goes below the 1.30 level, it is most likely that some buying orders in the market will be triggered. As for the 1.2850 level, I believe it is less likely that cable will hit this level. Considering that this level is still far away. Nevertheless, I keep a bearish view on GBPUSD, based on the head and shoulders formation as well as the expected releases for today.”
Yagub: I agree with your comments on Cable. In fact, the risk is more than the reward on the British pound right now. I would not trade it. However, I also see a good potential buy limit order possibilities, especially from the level of 1.29 to 1.2930 levels. Basically, within these levels, as you said limit orders are expected to be triggered. Unless, we see some extremely negative news coming out.
Why the Turkish Lira must depreciate further
Moving on the Turkish Lira, Yagub has revealed his insights on USDTRY as well as EURTRY. Starting off by commenting on the media, he stated that the media is painting only the good image of the Turkish economy and how the central bank of Turkey has been given the news that they will do their best to make things more stable. If you’re trading USDTRY or any other TRY pairs, Yagub mentioned that you will need to understand that the economy in Turkey was shocked.
The model that we are looking into is that the Turkish Lira must depreciate further and the focus is on the word “must”. That being said, it means that the USDTRY or EURTRY will be up. After looking into USDTRY, Yagub could only comment that the depreciation of the pair has not been completed yet.
Building further, he pointed out that we are basically at the level of the June 2015 highs. Yet, back then there was not as much instability in the Turkish economy, as there is right now. If the market is just below the June 2015 highs, it means that we are looking into another breakout, so the targets that we are going to be looking into will be 3.0770 level. If we see a break above the 3.0770 level on USDTRY, it is extremely likely that we will be seeing further bullish attempts from this pair. To be more precise, further bullish attempts will be at 3.0940, 3.1470 and 3.1990. If you look into these numbers, Yagub mentioned that they should remind you that they are psychological levels.
Bearish view on EURUSD
Yagub: Concluding today’s session, Adamos, let’s also have a look in to EURUSD. Building further on the discussion that Europe seems to be in a bigger crisis at the moment, than the ECB and the rest of the central banks have painted in the media. So, what trade opportunities do you have for EURUSD?
Adamos Anastasiou: “On the weekly chart, we can see that The EURUSD is trading is a range. As a matter of fact, EURUSD has been in consolidation for the last year. Whereas in the intraday, at the moment of speaking, EURUSD has gone below the 1.10 support level. This level in the intraday has been considered as the psychological support level and now we see prices have been penetrating this level. I keep bearish view on the EURUSD and I will continue to expect the EURUSD to head lower.
Yesterday, we saw some negative news for the Euro, as the European and German ZEW Economic Sentiment were below expectations. This weighted further on the EURUSD. Moving further, there is a moderate risk averse in the market, so I would expect the EURUSD to go lower.”
Building further, Adamos has commented that for today: “The EURUSD has only reached 1.10, which could be seen as an entry signal for the market. Most likely we’re going to see prices to head towards 1.0913 for today. As for tomorrow we will have the ECB meeting and the US jobless claims, while on Friday pay attention to the PMI reports. Despite, some of these releases are not major, they will eventually impact the market as well. Due to the situation in Turkey at the moment, I believe that the investors are to leave Turkish assets and return to Europe. Hence, it could be a reason to why the EURUSD has not gone lower.”
Bear in mind, that this is only a summary of today’s Forex trade opportunities discussion. Therefore, it is advised to watch the full video, in order to gain all the insights and trade opportunities that have been provided by Adamos and Yagub during today’s session.
If you have questions for Adamos or Yagub, feel free to ask them in the comments section below.