The European Central Bank meets later today for what is set to be one of the most important ECB meetings in recent years.
Mario Draghi has signaled multiple times, and is widely expected by market analysts to announce a blueprint of what the central bank's QE tapering will look like in 2017, and while no actual tightening is expected to be implemented, the ECB is expected to announce it will cut its €60bn/month bond purchases in roughly half starting in January 2018 and lasting for the next 9-15 months.
Most traders believe that this is set to be bullish for the EURO but the fact is that we have not traded such an event for the EURO yet (in it's history).
In this report I will not be covering the fundamentals as they are a wide speculation at the moment and I would like to focus on something more solid, such as technical analysis.
I will only cover EURUSD and the DAX in this report. I will also only focus on the daily charts of these two trading pairs.
Lets begin with the DAX
DAX (GER30) Daily Chart
(click on image to enlarge)
If you take a look at the DAX daily chart, zoom out a little and add the trend lines (red & green) and you will see a possible triangle with price action finding resistance at the current area.
The yellow levels on this chart point to the upcoming support levels, they are the levels where we should be taking profits and being cautious.
All in all, I expect the DAX to be bearish in today's meeting, if that happens I expect price action to head to, or below, 12,800.
On the possible bullish side I don't see price action breaching 13,100 but it is always a possibility so the only way to trade this one is with pending orders or if you are to trade with market execution, wait for the final 5 minutes before the actual ECB event.
Be very careful of the press conference.
EURUSD Daily Chart
(click on image to enlarge)
EURUSD tells a beautiful tale of a big bad bear, the ending is priceless with the peasant trader making a massive ROI. I'll make sure to tell you all about it in a beautiful recap video.
What you see in the image above is a head and shoulders pattern on the daily chart, you also have all the key support and resistance levels mapped out for you.
As you can see price is below the DC and is testing the EMA, I dont see price heading above the DC at all, but it could make a shadow above it.
If the neckline is to be broken today, which I believe can happen, then we would need to see a drop of at least 170 pips, if not more, and that can happen today since a lot of people will be waiting on the ECB gang today to give us details about the all important QE!
I am shorting EURUSD, my target TP is way down at the 1.1450 level. My SL is at 1.19235.
I am bearish overall on the EURO today, I wish I could write more about this but I am rather busy so you'll have to do your own analysis on this too and be your own judge and jury.
Whatever you decide to do, I wish you all my best!