By Glenford S Robinson
US interest rate cut sentiment is the nugget that is keeping the EUR/USD above 1.1200. If it wasn’t for the prospect of an interest rate cut of about 25-basis points coming July 31, 2019, the pair would’ve easily been rambling between the 1.1000 – 1.1165 range. Therefore, when the interest rate cut comes to past July 31, 2019, the pair could very well set up shop at levels below 1.1200. The lowest level the pair has been in the last two to three weeks is 1.1181, recorded on June 18. We call this area “true support” because it is characterized by an upward slope starting at the bearish candle seen on the Daily chart on June 18.
If a trend line is drawn from the bottom of the June 18th bearish candle on the daily chart and tracing down to the bottom of the July 19th bearish candle, an upward slope can be seen. A triangle formation is visible when a trendline is drawn from the top of the June 25th bearish candle to the top of the July 19th bearish candle. After noticing that a bearish down trend was the trend leading into the triangle formation, some Technical Analysis traders may interpret the triangle formation as a signal for a breakdown to the downside.
Such a downside break could occur on Thursday, July 25, 2019 when the (European Central Bank) ECB is expected to maintain the Eurozone’s interest rate at 0%. It might be a little premature for the ECB to cut interest to anything less than 0%. However, anything is possible when it comes to monetary policy making. So, an interest rate cut lower wouldn’t be a surprise because it is coming at some point in the future.
If our prediction holds true, we can expect that the 1.1200 area of support could quickly become an area of resistance all day Thursday, July 25; and may give way Friday a t 8:30 am when US Q2 GDP is expected to come in lower than previous readings.
Going forward, Forex Traders should expect an increase level of volatility for the EUR/USD currency pair. Where there is volatility, there is potential for large profits or large losses. So, caution should be exercised when trading these volatile markets.
Disclaimer: Trading the Forex market is a very high-risk endeavor. It is recommended that amateur Forex Traders get professional advice from a certified investment advisor before trading these Forex Markets because it is possible to lose all funds deposited in a forex trading account. The information presented in this article should not be taken as professional advice because Mstardom Finance and its subsidiary Mstardom, Inc., and writers do not provide investment advice.
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Mr. Glenford S. Robinson is the Chief Executive Officer and Founder of Mstardom Finance. He is the editor-in-chief of News and Magazine article publishing. Mr. Robinson is also the lead developer of the Mstardom Finance Platform at Mstardom.com. He is passionate about quantitative finance and technologies associated with that discipline, such as python-based algorithmic programing. Mr. Robinson is also a Clinical Laboratory Scientist currently practicing laboratory medicine. When Mr. Robinson is not practicing laboratory medicine, writing articles, or studying finance, he is creating mathematical and statistical modules, using quantitative approaches to identify trading opportunities in the Forex and Stock Market.