Recommend: Long on EURUSD, Short-Term

Don't be scared when you see the Gold and Silver charts below. This article is not about trading commodities (although there are some telling signals being given off at the moment). I had a hunch this morning when I came to work that a downward correction of the USD was imminent. This morning's bull-run seemed out of place, for some reason. I couldn't shake it. I decided to put these commodity analyses into this blog for one very specific reason: they both support a bullish EURUSD in the nearest future.

I also read Simit's recent post which suggests something similar on the EURUSD. Let's dig in.

On the weekly chart, Gold's price just hit the 76.4% line on my Fibonacci and quickly bounced off and turned bullish. If I were to draw a trend line from that lowest point to the current price I'd also see pretty blatant signs that this metal is at a great buy point within its trend (not to mention that a few analysts I've spoken to repeat the mantra that Gold is in a "secular bull market" right now, and is expected to continue rising for some time).



Silver is no exception, either. Silver also hit a significant support line in my Fibonacci and hurriedly bounced off (see the bounce for yourself below). Silver tends to mirror Gold anyways, so this doesn't do much except support the Gold analysis above.



The point of these highlights is to show that the EURUSD is also approaching a significant support line on my weekly chart's Fibonacci and, according to Simit's analysis, is also at a great buy point within its uptrend. A downward target just above 1.42 remains, but if it fails to breach (and commodities seem to suggest that it will), the next upward price target is possibly as high as 1.46. If Simit and I are right on this, there's a great opportunity here and I'd hate for you guys to miss out.



To try to verify this assumption, I checked the USDCHF chart as well (since the CHF is pegged to the EUR, and these two pairs mirror each other with only fractional discrepancies). This pair demonstrated (below) that the price recently breached a significant resistance level on my Fibonacci near 1.0375, but found no support and is now coming back down; also supporting all of my assumptions thus far.



Being pro-Dollar myself, I have a hard time telling clients to short this currency. But as a short-term trade, this may not be a bad option. Take your pick: you can either go long on the EURUSD, short on the USDCHF, or even long on precious metals. Either way, you're betting on the same thing happening: a short-term downturn in the greenback.

Likewise, there are great opportunities to effectively hedge through diversification. If your money is on a bearish USD, then go long on the EURUSD with a smaller long position on the USDCHF to hedge it (stops placed roughly equal distances on both). Vice versa if you think the USD is on the up-and-up. Take your pick!

Open a trading account with ForexYard today and test these strategies out for yourself.