Trading Idea: German ZEW Survey and EUR/USD Price Effect

Posted by John Kelvin on Oct 15, 2019 9:08:13 AM

The ZEW will release its German Economic Sentiment Index and the Current Situation Index – reflecting institutional investors' opinions for the next six months – during the early European session this Tuesday.

The headline Economic Sentiment Index is expected to worsen to -27.3 in October as compared to -22.5 reading booked in the previous month. Meanwhile, the Current Situation Sub-Index is also expected to deteriorate further to -26.0 from -19.9 posted in September.

 

EURUSD PICTURE

 

The impact these developments have on price are relative to the clearly shown resistance right at the 50-day simple moving average(SMA). The 50-day SMA plays an important role here, as price has consistently tested this level over time and pulled back down. When price closes above the 50-day SMA, there are high chances of price moving higher as this will serve as a potential support to price.

In addition, the bearish hidden divergence set up on the daily chart also indicates underlying weakness found during retracements in a downtrend. This is nice to see during price retests of previous highs. “Sell the rallies” which means to get ready to open a short position. The bearish hidden divergence is a type of divergence that is spotted when price trend in a different direction from the oscillator(RSI).

When price is trending Lower-High(LH) and the oscillator is trending Higher-High(HH), this is a clear sign of weakness and test of the previous support.

Technicals suggest that a breakdown from the 0.5fibonacci retracement ratio, will call for a move to test 0.618fib down to 0.786fib from $1.09680 down to $1.09296.

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Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. Traders should always make sure they carry out their own research before buying any idea given. The views expressed in this article are the author’s and may not represent the views of EMX.

 

Topics: Trading Ideas