USDHUF - LONG BOUNCEHey Guys!
So this is a dead simple trade: Strong price rejection off of a good trend line. I expect a bounce towards 312.
Trade Well.
-AW
EURHUF trade ideas
Bearish bias, with trendline precision by tick- Ichimoku setup is bearish: price, Tenkan and Kijun are below Kumo. Forward Kumo is bearish, Tenkan is below Kijun. However Chikou Span (lagging line) should break below past candles too for further momentum pickup.
- We have a minor bullish trendline with tick precision. Once it breaks, space opens to 300-302 target.
- Heikin-Ashi shows some indecision at the trendline support. haDelta+ and haOscillator show momentum loss and minor positive divergence.
Macro:
- January CPI this morning was more or less in line with expectations: Headline YoY was slightly higher at 2,3 %, core CPI at 1,6 % (bit lower than prev.).
- GDP at 1,6 % was lower than mkt consensus of 2,2 %
- Central Bank will stick to low rates and lose monetary policy via non-conventional tools. I don't think they have much power to weaken HUF, rather to slow down or counter HUF appreciation coming from the still extremely high C/A surplus.
I believe this trendline will break. The question is if happens soon, or only later. For now I'd reduce some short exposure, with strong focus on the trendline support below at 308, and Kijun Sen above at 309,50.
A possible top signal within neutral Ichimoku + macro thoughtsThis post is just an addition to my morning charts published on Twitter, in which I called for a possible top. (at 310,40 spot price then).
In this chart you can the setup with Heikin-Ashi indicators.
- Ichimoku is neutral. Price is at the equilibrium level at Kumo supp/res, but forward Kumo still has a bearish bias and Kijun Sen (26 days average) still points down.
- Heikin-Ashi may print an inside body candle today, with both upper and lower wicks. haOscillator and haDelta+ are about to cross down -> can be indication for a local top.
- EWO is neutral.
- MACD signal is: bearish consolidation (fast line is above signal line, but both are well below zero center line)
I already sold some in the morning based on my prev. Twitter post. Looking for a firm Heikin-Ashi sell signal to add to the position. (approximately with a confirmed close below 309,25)
p.s.: Some macro. I talked to friend of mine, who is a very smart macro analyst and pro investor, with excellent knowledge of Hungarian economy. After our discussion, I have a serious impression. With all my respect to all other market analysts, and to National Bank of Hungary staff calculation, I really think they all undershoot possible inflation targets for 2017! Inflation is going to be much higher, and will hit in sooner than they all expect. Our bet is a 3 % headline already by mid of the year! -> if this will be the case, without any reaction in rates, The Nat. Bank of Hungary will minimum stop adding to non-conventional easing, while C/A surplus will still be relatively high this year. -> supportive for HUF, and EURHUF possibly will reach 290-295.
EURHUF - EASY LONG PLAYThis trade is great. It just bounced off of a resistance with conviction, and will most likely be bouncing much higher after a little consolidation. I'm going to be looking for an entry on the 4 Hr candles.
Warning for bulls: take some profit- Ichimoku setup is bullish, but
- Heikin-Ashi has some early warning signals: price could not not close above 314,50-315 key resistance for 8 days now.
Today we have another doji candle. haDelta has negative divergence. haOscillator has negative divergence, and a cross down below zero would confirm a local top.
- MACD histogram ticks lower (negative divergence)
- EWO is bullish, but chance for a value top.
- Market may be developing a bearish wedge pattern -> lower trendline and/or Tenkan Sen can be used as tight trailing stop.
315-316 is a trong resistance and a cap for this year.
Start taking profit on long EURHUF!
Time for a small pull back?Weekly:
- Ichimoku is neutral. Price is at resistance.
- Heikin-Ashi is bullish, but cn it make a higher high this week? -> haDelta may top
- MACD points up, but it lines are below zero -> "consolidation"
- EWO is back to neutral
Daily:
- Ichimoku is bullish with supports at 311,50 and 309,80
- Heikin-Ashi says a local top is possible.
- EWO is bullish, but the histogram suggests 3rd wave is completed.
Strategy: Reduce longs / Sell short dated covered Calls
Fundamentals: No change in Hungary. Macro is improving, Flow from C/A surplus is super (HUF) positive, there is serious wage pressure in economy, inflation already started to pick up, NBH is trying to do everything to maintain as high nominal FX rate as possible.
Heikin-Ashi quantification suggests partial TP- Nice and obvious bearish trend.
- Heikin-Ashi signals possible consolidation or some pull back ahead. haDelta already gave warning signal: cross above SMA3 from a relatively low print. Now also haOscillator is turning up.
- EWO is bearish, no positive divergence seen for now.
- Take partial profit on EURHUF shorts, try to sell again a retest to 307+
5 and 8 years bullish trendlines are brokenIn last two months EURHUF managed to break major bullish trendlines. This doesn't mean necessarely it will collapse and start a bearish trend right now. As National Bank of Hungary is still interested in a rather weaker ccy, probably they will do some further steps to counter sudden HUF appreciation. On the other side there is serious and increasing wage pressure in Hungary, which may end up in a wage-price spiral next year, sending inflation much higher from 2017. Of course NBH will not react to that, they will happily tolerate a deep negative real rate. However there is one other bullish HUF factor, which NBH can not really fight: that is the flow from the still extreme positive C/A.
What does the long term weekly chart and Heikin-Ashi price action tell us?
- Ichimoku setup is turning bearish as forward Kumo is bearish biased now.
- Price has been trading below Kijun Sen and forward Kumo, as weeks will pass by, it will move below spot Kumo too.
- Chikou Span is below past Kumo now! Last time it happened was Sept-Oct/2014 (2 years ago). On next price dip it will enter open bearish space.
- As you see, 306 is the most important lower key supp/res level. Once it breaks on weekly basis, the bearsih trend will extend to target 286-290
- Heikin-Ashi signal is very important. For now it shows market started some consolidation after initial bearish break of trendlines and Ichimoku structure. If you zoom in, you will see recent candle is small green, haDelta crossed up, but its SMA3 and haOscillator are still below zero line
- EWO is bearish but ticked up a bit, MACD is bearish, but histogram suggests some more seideaway price action is possible.
All together I think from this point we have to consider EURHUF as a longer term short candidate, but we do not have to rush selling into it. As very likely we'll see few weeks of sideaway consolidation, or maybe even pull backs to 310-311 to retest 100wma spot Kumo and broken trendlines, we have to try selling it on spikes first. Later, if 306 really breaks, we can add to shorts at lower price too.
Note:
more or less I was long EURHUF for the last 5 years. I had my bearish view on Hungarian ccy, but I do not have it any more. Hungary is a lot less vulnerable to external shocks now, their funding is rock solid, and well yes, there are some political noise sometimes, but that is only theater, nothing else :-). Some says politics may deteriorate real economy and cause structural problems during next 3-4 years. Well OK, my answer as a trendfollower trader is: who cares??? I don't want to, and can not trade based on beliefs and views for 3-4 years ahead. I can only try to trade market price action for 2-9 months ahead.
EURHUF - Long from bottom of the rangeFor quite some time, EURHUF has been trading sideways. The 307 level has been very important in the last decade, many trend changes happened at this level.
On Thursday, after the FED, the Hungarian Forint accelerated strongly and broke below the 307 level. Today, half of that move has been corrected, and price closed above the 307 level today, forming a class A bullish divergence. I expect price to reach the ceiling of the range, around 317. Stop below the swing low.
Local top at 318 key resistanceWhatever the reasons are, we have to admit HUF has been really shock proof in recent days.
Regardsless the spike to 322 on illiquid market on Brexit morning, it looks like 318 hard resistance is still working. Is it supported by NBH there as some believe, or not... doesn't really matter who is selling there and why. For now the short term top was likely in, as signalled by haDelta.
Price started to drift down to 315-316 support. Will it go lower? Well, it is hard to predict as we don't see what's next on global markets. I believe the correctional global "risk rally" will last for 1-2 days only, then we'll see risk-off again. So probably EURHUF might bottom ard 314+, then spike higher again.
Anyway, let's forget quickly predicting the future, and as usual just focus on present, follow Heikin-Ashi price action only!
Nice dip, but we may see some short covering at resistance- Ichimoku setup has some bearish bias, but in fact it is still far from confirmed bearish
- Heikin-Ashi is bearish, but haDelta is getting close to a relatively low level, while price is approaching 309,50-310 key resistance. I don't say it can not break below 309,50, but I think first we can see some profit taking and maybe a spike back to 312,50 bearish support.
I covered small part of my short position today, however I am looking to re-sell in 312-313 range... or of course lower if it breaks down :-)
Rate cut did not matter. What about divergences?Bulls forced it higher even after Fitch upgraded Hungary. What's more, the "strangest" central bank of the world tried to force it even higher with another 15 bps rate cut today. OMG! Hungary as 0,90 % rate country :-D hahahaha
If someone had ever told me this... Ah, never mind. The whole world and most of central bankers lost completely their minds. Why would a small European country be different?
Weekly:
- Ichimoku setup seems bullish again. WHat's more, we have a medium bullish Tenkan/Kijun cross.
- But price reached 318 resistance, while haDelta/SMA3 already signals loss off momentum after 4 weeks of bullish action.
- Lower supp/res levels: 313 / 311 / 308
Daily:
- Ichimoku is bullish, lowe supports are: 313 (Kijun) and 312 (Kumo and 100wma)
- Heikin-Ashi candles are very strange. for the third day in a row they have small bodies and in the last two days very long wicks! It tells us the story: yesterday (first trading day after the upgrade) some bulls got stopped and some opened shorts for retracement. Including myself. Bloody bulls tried all they could to push it over 318 resistance. But what happens when net net mkt is extremely short HUF? Of course there is no one to be stopped really.
And according to some data I received today from a friend (sent from Bloomberg) market is in fact very short in HUF!
- There is something else notable: haDelta negative divergence to price!
So did you find last 3 days exciting in EURHUF? Well intraday actions were awsome. In fact we are at the same closing levels. I think the bearish HUF action was mainly on back of PLN and RON weakness, and also due to some outflows as major Hungarian companies on BSE have just paid dividends.
Don't forget, the C/A is still massive positive!
For the record: if you follow me on Twitter, there you saw how I got burnt a bit on too early shorts. Not a big deal as I only stopped half of the position, and the stop took place right in time. The rest I keep, as I think EURHUF is stretched here, and both techs and positionning suggests consolidation and pull back may still happen.
Bearish continuation after Kijun retest. Tgt 304-305Weekly:
- Ichimoku neutral
- Heikin-Ashi neutral, lost some momentum, but weekly haDelta close will be important! An haDelta failure at zero line may trigger some more selling. Oscillator is still bearish.
- EWO is bearish.
- Major trend supports ard 303-305
Daily:
- Ichimoku is bearish
- Heikin-Ashi Price action resumes bearish after retest to Kijun Sen (bearish support)
- haDelta back below zero.
- EWO is bearish.
Hold on to shorts until min. 304-305 tgt.
"Simon says:" - Year end short?OK, his name is not Simon (real name is "M").... but he is the Fin. Min. in Hungary :-)
And yesterday he had a hint on Reuters, that he would prefer a year end EURHUF-0.40% rate closer to 308-310.
Well, for the constitutional debt to GDP obligation to be met, they may well require it.
On the other side there is another "friend"... let's call him "G". Actually I don't know if they are really friends or not. But "G" doesn't really want EURHUF-0.40% to be any lower, as last year he closed his books ard 316!
However Both "M" and "G" has the same "Boss", and I think he will decide this story and if so, orders "G" to push it somehow to help "M's" year end goal!
We shall see. Purely on technicals a retracement to 312+ is not impossible.
Is the "sweetest perfection" coming to an end?Weekly:
- Ichimoku back to neutral as Price dips into Kumo. Picture is still unclear as forward Kumo is just a thin line (non existing), Senkou B has been at same flat level for almost 30 weeks (!) at 311,25. Kijun spiked up to same level by now. Price dips below Kijun (medium bearish). All this still means mkt doesn't have a clear trend direction, nor any momentum.
At least we know what is the long termequilibrium :-) (311,25)
- Heikin Ashi gives a bearish signal.
- EWO dips towards zero
- Major strategic trendline support for future will be ard 302-304
Daily:
- Another swing below the flat Kumo. Ichimoku still has to be considered as neutral, because Kumo ahead is thin and flat, so is Kijun Sen. Chikou is at past candles.
- We don't have a trend, just a perfect triangle. This is very rare to see something really perfect in a less liquid ccy like EURHUF. Look at those peaks and lows, almost all of them matches trendlines by tick!!! Wonderful, isn't it?
Question is if this sweet perfection lasts, or it finally breaks on lower side?
- Heikin Ashi is bearish
- EWO is in a bearish wave
Note: Fitch may change Hungary's rating up to investment grade this Friday. In that case a breakdown would happen.
I increased my HUF exposure a bit (weekly chart added)recently EURHUF has been one of the most boring pairs. It was not reacting to anything really, compared to other EM ccys it was moving in a tight range. Will the global risk on finally confirm a valid bearish breakout and continuation on the daily? I already posted a chart earlier on Twitter. Here is some further comments and weekly chart added.
Weekly:
- Ichimoku picture is neutral: Price in the Kumo, stas between Tenkan and Kijun. Kijun is also located in the Kumo. Tenkan-Kijun-Senkou lines all stay together ard 310,50, which means this is a 52 weeks (1 year!) equilibrium price.
- Heikin Ashi is bearish biased. After price failed to break above weekly cloud, it started to drift lower. Momentum is not very strong yet, but smoothed haDelta is below zero line.
- We have two major, multi-year uptrend lines matching each other around 302. We also have a stronger horizontal supp/res zone at 302-305.
- NBH doesn't want to see a too strong HUF in the long run (hehe which Central Bank yould like to ee a strong ccy in these days anyway?), but I think they would not mind a 300-304 level closer to year end, as that would help to fulfil Hungary's end of year debt level criteria, defined by its constitution (!), which says gross debt can not grow YoY basis.
Daily:
- Bearish Ichimoku setup.
- After brief retest to Kumo and Kijun Sen, Heikin Ashi gave a bearish pattern signal yesterday and today.
- Possible target 305 and 302+, stop above 312,50.
I added to my EURHUF shorts today on break of 310.
I also think there is some relative value story going on in PLNHUF. Some mkt players enterred short there as Polish elections result will likely bring out PiS as winner to form Government. In that case they will fully implement Hungarian-style measures and steps, which will cause the Zloty underperform.
Goulash cannon reloaded?Well, actually the "Goulash-cannon" really exists!!! It was (is?) used by the Hungarian army for catering reasons. Basically they are cooking and store goulash in it. But let's see what's cooking in EURHUF?
- Ichimoku picture is turning to bearish . Price attempts a bearish Kumo breakout. This also means a possible break of triangle's lower side. Supp/res lvls in focus: 310,50 / 309,25
- Heikin Ashi sell signal! Obvious bearish candle today with haDelta/SMA3 bearish cross below zero line.
- if the lower (thick green) trendline goes broke, and price clears 308,50-309 level, then next tgt will be 303!
I hold my increased HUF exposure and keep the risk reversal Put option structures opened earlier.
EURHUF attempts a bearish reversalWho cares about zero carry any more? Direction matters, that's it.
This post is a follow up to my earlier warning today on Twitter.
Weekly:
- The ccy pair did not match the criteria of bullish Kumo breakout in last few weeks. No higher high above Kumo.
- Heikin Ashi is about to make a reversal pattern (of course end of week will matter).
- Chance for a double top is increasing.
- lower supp/res level and possible pull back tgts: 309 / 307 / 305 / 301 (as ultimate trend support)
Daily:
- Ichimoku setup turns back to neutral, Price attacks Kijun, 100 WMA and flat Senkou B line
- Inner trendline is broken, lower trendline still acts as supp/res ard 310
- Heikin Ashi gave a sell signal yesterday, the signal is validated today.
The bias is increasingly bearish, but we don't know wether or when it gains more momentum. Coming days will be very important, as FED decision may affect USDHUF which is trading ard critical last support of 276-277, and on Friday S&P will publish rating of Hungary. After 4 years spent in "Junk" category an upgrade to "investment grade" is not impossible.
