11.08.202612:11 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – August 11

Another day when, due to low market volatility, none of the trading instruments showed any meaningful movement. Only the Canadian dollar could be traded using Mean Reversion, but even there, I did not get the strong reversal move I was waiting for. I did not trade anything using Momentum.

As expected, the euro did not react at all to Italy's trade balance. Market volatility remained minimal, as there were simply no significant catalysts for a move. In the second half of the day, attention will turn to US existing home sales and the NFIB Small Business Optimism Index. Existing home sales reflect activity in the interest-rate-sensitive housing sector and indirectly indicate the condition of the consumer, while the NFIB index reflects sentiment among small businesses, which account for a significant share of employment. Both indicators are considered second-tier releases, but a significant deviation from expectations could have a modest impact on market sentiment.

The outlook for the euro and pound is cautious. Strong data could further strengthen the dollar and extend the decline in both European currencies, putting additional pressure on EUR/USD and GBP/USD. A weak result, however, would weaken the US currency and give the pairs some relief. Until the data are released, the market will most likely remain in a narrow range, with a clear direction emerging only in the event of a statistical surprise.

If the data are strong, I will rely on the Momentum strategy. If the market does not react to the data, I will continue using the Mean Reversion strategy.

Momentum Strategy (breakout) for the second half of the day:

For EUR/USD

• Buying on a breakout above 1.1554 could lead to a rise in the euro toward 1.1579 and 1.1620;
• Selling on a breakout below 1.1528 could lead to a decline in the euro toward 1.1516 and 1.1502;

For GBP/USD

• Buying on a breakout above 1.3527 could lead to a rise in the pound toward 1.3554 and 1.3581;
• Selling on a breakout below 1.3490 could lead to a decline in the pound toward 1.3464 and 1.3435;

For USD/JPY

• Buying on a breakout above 159.39 could lead to a rise in the dollar toward 159.60 and 159.83;
• Selling on a breakout below 159.13 could lead to selling pressure on the dollar toward 158.83 and 158.57;

Mean Reversion Strategy (return) for the second half of the day:

For EUR/USD

• I will look for selling opportunities after a failed break above 1.1550, followed by a return below this level;
• I will look for buying opportunities after a failed break below 1.1525, followed by a return to this level;

For GBP/USD

• I will look for selling opportunities after a failed break above 1.3517, followed by a return below this level;
• I will look for buying opportunities after a failed break below 1.3489, followed by a return to this level;

For AUD/USD

• I will look for selling opportunities after a failed break above 0.7069, followed by a return below this level;
• I will look for buying opportunities after a failed break below 0.7043, followed by a return to this level;

For USD/CAD

• I will look for selling opportunities after a failed break above 1.3945, followed by a return below this level;
• I will look for buying opportunities after a failed break below 1.3924, followed by a return to this level.