Euro futures Bullish sentimentDaily liquidity taken . Strong bullish momentum to the upside. multiple inducements to take the little bit of liquidity thats left before making a major move to the 1.086 area.
E71! trade ideas
Expect strong EURO Tapped into bullish OB that formed within 40D lookback range. We see good respect to that OB so our target next would be 1.10065 (Bearish OB formed within 60D lookback range). And from there we can expect 1.11400 to be taken. Expect all this to take place before 26th of April. You can take a swing trade long from here if you want just set your stop below 1.07075. I am using the EURO FUTURES contract as it gives more clarity for the EUR/USD.
OANDA:EURUSD
Euro Futures SupportAccording to the latest sentiment analysis data open source, the bullish sentiment on the Euro remains strong. The data shows that the number of short traders are more than long traders which mostly leads for furher upmove.
Option Trades Sentiment
Option trades sentiment is another important factor to consider when making trading decisions for us. Based on the latest option trade analysis data from CME exchange, option trades data on the Euro is also bullish. The baseline is that naked puts can be easily convert in to syntetic long positions.
Options traders commonly use this technique due to the leverage effect in options trading. Buying activity at this level can have a significant impact.
However, the presence of strong support does not guarantee that quotes will head towards this level. Growth may continue without a break.
a weekly price action market recap and outlook - fx - eur/usdGood evening and i hope you are well.
The FX markets are not exciting, since most central banks are doing nothing but waiting currently. Short update it is…
eur/usd
Quote from last week:
bull case: Bulls bought where they needed to because if 1.08 would have failed, that would have been a clear sell signal and 1.075 would have been next. Now they need good follow through above 1.0875 and a daily close above. Market is neutral inside the range 1.08 - 1.086 until clear breakout. Time wise i think the bull breakout will happen this or next week.
I hope you listened to this because this was as perfect of an outlook was it gets. Have been talking about the retest of 1.1 for weeks now and the high this week was 1.0985.
bull case: Bulls got their breakout and their next target is the upper triangle line around 1.097 to break above for the retest of 1.1. They also created a bull channel and want a third leg up. Right now the market expects a pullback to probably retest the breakout and maybe the daily 20ema which are 1.087 - 1.09. Bears printed 2 weak looking bear bars on the daily, which increases the odds that we probably go sideways here.
bear case: Bears sold the upper triangle line which started 3 years ago. Their next target is the lower bull channel trend line and the daily 20ema around 1.0875, which is pretty far away, given the weak selling pressure they created the last 2 trading days. If they find strength, they could argue a trading range to trade back down to the lower triangle trend line 1.078 but that’s so far away and there are many support areas to break through first, so very low probability.
outlook last week: “up - invalid below 1.08 (daily close or big bear bar closing on it’s low)“
→ Last Friday we traded 1.086 and now we are at 1.092. I said the breakaout will happen this or next week and gave the obvious target we undershot by 15 pips. Pretty fn amazing.
short term: Sideways to up - target above is 1.1 where i expect many profit taking & sell orders - invalid below 1.084
medium-long term: Sideways inside 1.058 and 1.105 - the next 2-3 months something will happen news-wise which will set the market tone until the end of the year and we will see bigger fx movements - until then, neutral inside given range
My EUR Futures Trade Analysis
Dear fellow traders,
I wanted to share with you a trade I made on the EUR Futures last Thursday. To start, I conducted a thorough top-down analysis to assess the order flow. I began from the monthly timeframe and worked my way down to the 15-minute chart. Interestingly, I executed the trade based on the 30-second timeframe, highlighting the importance of adaptability in responding to market conditions.
The trade presented a risk-to-reward ratio of 6.9 to 1, which I took, but went on to make a significant move of over 205 pips which could have resulted in a 17 to 1 trade. It's crucial to conduct a top-down analysis, pinpoint a point of interest, and patiently wait for confirmation before entering a trade.
I'm eager to hear your feedback on this trade analysis, and if you're interested, I can share more insights like this in the future. Remember, each day presents an opportunity for improvement in our trading journey.
Until next time, I'm continuously honing my skills to become a better trader in every aspect.
Best regards,
Lord MEDZ
DXY Seems Likely to Show Some Mid-Term StrengthDXY has pulled back a lot as US bonds have ripped to the upside, however it would appear that the Yields may be setting up for a short term bottom which would result in the DXY coming back up. This would align with the Euro coming back down, but I'm not convinced the move up in DXY will be long-lasting, however I do think it will be notable enough to initiate some Bearish Reversals in Gold, BTC and the SPX and the completion of a potential Bullish 5-0 on the Euro which would take it to the 50-61.8% retrace down at around $1.08, before continuing to the upside.
$EURUSD Long IdeaTrade Idea
- Obviously Price Has reached It's targets for the Week. (Weekly Swing High & Previous Months High)
- Currently there's no context for higher prices, as daily in the process of creating a FVG we can use to deliver higher prices
- 4H Bullish FVG can push prices Higher toward these 4H two highs
- 1H FVG Entry
- R Target; 2R
EURUSD 6E LongToday EU had a fairly strong daily close. Also, DXY rejected from some key daily levels.
My Daily DOL is Monday's high.
We also saw SMT divergence at the lows (EU failing to make lower lows while DXY made higher highs).
I want to see the H1 discount bullish arrays respected, to then look for a bullish displacement entry trigger on M5/M15.
a weekly price action market recap and outlook - fx - eur/usdGood evening and i hope you are well.
Quote from last week:
Bulls got their major trend reversal and i conclude the bear trend from the 2023-12 over. I drew my next best guess on how this new trend could play out. It’s a small trend inside a bigger trading range, so it will probably be choppy and weak. Bulls managed to trade above the daily 20ema and made it support, which trapped all bears who sold below 1.08, if bulls can keep the bullish gap open, this might fuel the rally faster up to 1.092 as it’s first target.
Bears closed the gap early but failed at 1.08 which turned support it seems, at least for now. I adjusted my w5 series slightly price and time wise but not much. W2 was deeper than expected but inside acceptable range for a pullback.
bull case: Bulls bought where they needed to because if 1.08 would have failed, that would have been a clear sell signal and 1.075 would have been next. Now they need good follow through above 1.0875 and a daily close above. Market is neutral inside the range 1.08 - 1.086 until clear breakout. Time wise i think the bull breakout will happen this or next week.
bear case: Bears closed the bullish gap but failed to print below 1.08 and the best they can hope for is to stay inside the given range above. Bears had 4 good pushes down from 2023-12 to 2024-02 and i don’t think they want to die on that hill below 1.09. More will probably show up around that price and definitely at 1.1.
outlook last week: “up - but invalid below 1.08m then we move more sideways first (bull gap close - see chart)“
→ Last Friday we traded 1.0860 and now we are at 1.0860. Funny eh. Good outlook i guess. Market acted as expected and i keep leaning bullish.
short term: up - invalid below 1.08 (daily close or big bear bar closing on it’s low)
medium-long term: sideways inside 1.058 and 1.105 until bigger breakout
EURUSD 6E Long-Price failed to close below 50% of the Daily RDRB price range.
-Price failed to close below Tuesdays low, as well as failing to close below several other previous daily lows.
-Daily DOL is Wednesdays high.
-I need to see H4/H1 discount arrays being respected to then look for bullish displacement entry triggers on M15/M5
EURUSD Short IdeaPrice has rejected multiple times on the daily chart from the 50% level of the bearish orderblock @ 1.08635 . Price also failed to displace and close above Mondays high.
My Draw on Liquidity (DOL) is Tuesday's low, and am hunting a short setup.
I want to see H1 candles closing with rejection wicks in the H1 bearish FVG areas ( 1.08565 to 1.08580) as well as 50% of the H1 bearish orderblock (1.08605).
H1 candle closing rejecting this area, and I'd look for entry on M5.
Let me know your thoughts on this trade idea, and what you are looking for on EUR.
EURZAR SELLING OPPORTUNITY (short EUR) (long ZAR) BRICS powerEURZAR SELLING OPPORTUNITY short EUR long ZAR BRICS power. The EURZAR pair has been volatile in recent months, with the EUR weakening against the ZAR. This is due to a number of factors, including:
The ongoing war in Ukraine, which has put upward pressure on energy prices and boosted the South African rand as a commodity-linked currency.
The prospect of rising interest rates in South Africa, which could make the ZAR more attractive to investors.
Concerns about the strength of the European economy, which could put downward pressure on the EUR.
BRICKS economies: The BRICS economies are generally considered to be emerging markets with high growth potential. However, they also face a number of challenges, such as political instability and high levels of debt. The performance of the BRICS economies can have a significant impact on the value of their currencies.
Before making any investment decisions, it is important to do your own research and consider your own risk tolerance. You should also consult with a qualified financial advisor.
Here are some resources that you may find helpful:
South African Reserve Bank: www.reservebank.co.za
Bloomberg: www.bloomberg.com
Reuters: www.reuters.com
Options Blueprint Series: The Covered Call Strategy DecodedIntroduction
In the ever-evolving world of financial markets, savvy investors and traders continuously seek strategies to optimize returns while managing risk. Among the plethora of strategies available, the covered call stands out for its simplicity and efficacy, especially when applied to a dynamic asset like Euro Futures. This article delves deep into the intricacies of the covered call strategy, using Euro Futures as the underlying asset. Through this exploration, we aim to equip you with the knowledge and tools necessary to navigate the complexities of the futures and options markets. By the end of this journey, you'll gain a comprehensive understanding of how to implement covered calls with Euro Futures, enhancing your trading arsenal with a strategy that balances potential returns against the inherent risks of the forex futures market.
Understanding Euro Futures: The Beacon of Currency Markets
Euro Futures on the Chicago Mercantile Exchange (CME) represent a contract for the future delivery of the Euro against the US dollar. These futures are pivotal for traders and investors looking to hedge against currency risk or to speculate on the fluctuations of the Euro's value relative to the dollar. Each Euro Futures contract is standardized, with each contract representing a specific amount of Euros.
Trading Euro Futures offers a transparent, regulated market environment with deep liquidity, making it an attractive instrument for a broad spectrum of market participants. The futures are marked-to-market daily, and gains or losses are credited or debited from the trader's account, providing a clear view of financial exposure.
Key Features of Euro Futures:
Contract Size: Each contract represents 125,000 Euros.
Tick Size: The minimum price fluctuation is $ 0.000050 per Euro, equating to $6.25 per contract.
Trading Hours: Euro Futures markets are accessible nearly 24 hours a day, allowing traders from around the globe to react to market-moving news and events in real-time.
Leverage: Futures trading involves leverage, allowing traders to control a large contract value with a relatively small amount of capital. However, while leverage can amplify gains, it also increases the potential for losses.
Market Participants:
Hedgers: Corporations and financial institutions may use Euro Futures to protect against adverse movements in the Euro's exchange rate, securing pricing or costs for future transactions.
Speculators: Individual and institutional traders may speculate on the future direction of the Euro's value against the dollar, aiming to profit from price movements.
Importance in the Financial Landscape: The Euro is the second most traded currency in the world, making Euro Futures a critical tool for managing currency exposure in the international financial markets. The contracts provide a gauge of market sentiment towards the Eurozone's economic outlook, influenced by factors such as interest rate differentials, political stability, and economic performance.
The Basics of Covered Calls: Charting a Course
The covered call is a conservative strategy where the trader owns the underlying asset — in this case, Euro Futures — and sells call options on that same asset to generate income from the option premiums. This strategy is particularly appealing in flat to moderately bullish market conditions because it allows the trader to earn an income from the premium, which can provide a cushion against a downturn in the market and potentially enhance returns in a stagnant or slightly bullish market.
Key Concepts of Covered Calls:
Ownership: The trader must own the Euro Futures contracts or be long on a futures position to write (sell) a covered call.
Option Premium: The income received from selling the call option. This premium is the trader's to keep, regardless of the option's outcome.
Strike Price: The price at which the underlying futures can be bought (call) by the option buyer. The trader selects a strike price that reflects their expectation of the market direction and their willingness to part with the futures if the option is exercised.
Expiration Date: All options have an expiration date. The covered call strategy involves choosing an expiration date that balances the desire for premium income with the market outlook.
Implementing the Strategy:
Selection of Euro Futures Contracts: The first step is to have a long position in Euro Futures. This position is the "cover" in the covered call strategy.
Selling the Call Option: The trader then sells a call option on the Euro Futures they own, receiving the option premium upfront. This option is sold with a specific strike price and expiration date in mind.
Outcome Scenarios:
If the Euro Futures price stays below the strike price at expiration, the call option will likely expire worthless, allowing the trader to keep the premium as income while still holding the futures position.
If the Euro Futures price rises above the strike price, the call option may be exercised by the buyer, requiring the trader to sell the futures at the agreed strike price. This caps the trader's upside potential but secures the premium as profit.
Risk Profile Graphic for the Covered Call Strategy on Euro Futures:
This graph illustrates the profit and loss potential of a covered call strategy applied to Euro Futures. The strategy involves holding a long position in Euro Futures while selling a call option at a specific strike price. If the Euro Futures price at expiration is below the strike price, the trader's loss is offset by the premium received from selling the call option. However, the profit potential is capped if Euro Futures rise above the strike price, as the trader may have to deliver the futures at the strike price, missing out on further gains.
Implied Volatility and CVOL: A Navigator's Tool
In the strategy of covered calls, understanding Implied Volatility (IV) is essential. IV reflects the market's expectation of a security's price fluctuation and significantly influences option premiums. For traders employing covered calls, especially with Euro Futures, high IV can mean higher premiums, offering better income potential or protection against the underlying asset's price movements.
Since the Euro Futures is a CME product, examining CVOL could provide an advantage to the trader as CVOL is a comprehensive measure of 30-day expected volatility from tradable options on futures which can help to:
Determining Premiums: By gauging current IV, traders can identify optimal premium levels for their call options.
Deciding which Strategy to use: High IV periods might indicate advantageous times to implement covered calls, leveraging CVOL's insights for timing entry and exit points.
Benefits and Risks of Covered Calls:
Income Generation: The most apparent benefit of the covered call strategy is the ability to generate income through the premiums received from selling call options.
Downside Protection: The premium received can offer some “protection” against a decline in the futures price, effectively lowering the break-even point.
Profit Limitation: A significant risk of this strategy is that the trader's profit potential on the futures is capped. If the market rallies strongly beyond the strike price, the trader misses out on those additional gains, as they are obligated to sell the futures at the strike price.
Initiating a Covered Call with Euro Futures: Setting Sail
Implementing the covered call strategy with Euro Futures involves a blend of strategic foresight and meticulous planning. The objective is to enhance potential returns or protect against downside risk through the calculated sale of call options against a long Euro Futures position. Here's a step-by-step guide to navigate through the process:
Step 1: Selection of Euro Futures Contracts
Long Position Establishment: Begin by establishing a long position in Euro Futures. This position acts as your safety net, providing the necessary coverage for the call options you're about to sell.
Margin: When going long Euro Futures, the Margin Requirement (suggested by CME on Feb-21 2024 is USD 2,100 per contract)
Market Analysis: Conduct a thorough analysis of the Euro Futures market. Consider factors like historical volatility, economic indicators affecting the Eurozone, and any impending events that might influence the Euro's value against the dollar. The chart shows how careful key Support and Resistances have been selected in order to decide when to buy long Euro Futures as well as deciding the Call Strike Price to use. Other techniques can be employed depending on the trader’s plan and methods.
Step 2: Selling the Call Option
Strike Price Decision: Choose a strike price that aligns with your market outlook. A strike price above the current market price can offer potential for capital appreciation, plus the income from the premium. Since the Resistance is located around 1.10, selling the 1.10 Call could be an appropriate decision.
Expiration Date Selection: The expiration date should reflect your market perspective and risk tolerance. Shorter-term options can provide more frequent income opportunities but require closer management. We will be using December 2024 in this educational idea.
Premium: When selling a 1.10 Call using DEC24 expiration on Feb-21 2024, the premium collected would be between 0.02180 and 0.02280. The midpoint being 0.0223 and the contract size being USD 125,000, this means we would collect USD 2787.5 in premium, which would either add to the profit or subtract from risk.
Step 3: Managing the Trade
Monitoring Market Movements: Keep a vigilant eye on market trends and Euro Futures price movements. Be prepared to adjust your strategy in response to significant changes.
Adjustment Strategies: If the market moves unfavorably, consider rolling out the option to a further expiration date or adjusting the strike price to manage risk effectively.
Case Study: A Voyage on Euro Seas
Let's illustrate this strategy with a hypothetical trader, Elena. Elena holds a long position in Euro Futures, expecting slight bullish momentum in the upcoming months. To capitalize on this and earn additional income, she sells call options with a strike price slightly above the current futures price, receiving an upfront premium.
As the market progresses, two scenarios unfold:
Bullish Outcome: The Euro strengthens, but not enough to reach the strike price. Elena retains her futures position, benefits from its appreciation, and keeps the premium from the call options.
Bearish Downturn: The Euro weakens. The premium received provides a cushion against the loss in her futures position's value, mitigating her overall risk.
Risk Management: Navigating Through Storms
Implementing covered calls doesn't eliminate risk but redistributes it. Effective risk management is crucial:
Use of Stop-Loss Orders: These can limit potential losses on the futures position if the market moves against your expectations.
Position Sizing: Ensure your position size in Euro Futures aligns with your overall risk management strategy, avoiding overexposure to a single trade.
Diversification: Consider diversifying your strategies and holdings beyond just Euro Futures and covered calls to mitigate systemic risks.
Conclusion: Docking at Safe Harbors
The covered call strategy, when applied to Euro Futures, offers traders an efficient way to navigate the forex futures market. By generating income through premiums and potentially benefiting from futures price movements, traders can strategically position themselves in varying market conditions.
However, the journey doesn't end here. Continuous learning, market analysis, and strategy adjustments are paramount to sailing successfully in the dynamic waters of futures trading. As with all trading strategies, the covered call approach requires a balance of knowledge, risk management, and practical experience to master.
Embarking on this voyage with Euro Futures and covered calls can lead to rewarding destinations, provided you navigate with caution, preparation, and an eye towards the horizon of market opportunities and challenges.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
a weekly priceaction market recap and outlook - eur/usdGood evening and i hope you are well.
Starting today i will do weekly fx recaps/outlooks for the 3 following currencies: EUR/USD, USD/JPY, GPB/USD (will only post 1 of the 3 here on tradingview).
eur/usd
Let’s start off with a monthly time frame. Market is in a multi decade bear trend and struggling to find a bottom. Was the 202209 low below 1 the true bottom? No idea and nor has someone else. What we do know is, market pulled back more than 50% of it and is ranging right around that level for many months now. Since markets continue to do what they have been doing, the high probability trades are betting on a continuation of the range between 1.058 and 1.105 on a daily/weekly. On the monthly the range is 1.06 to 1.22 (orange dotted lines).
bull case: Bulls see the market oscillating around the monthly 20ema for a year now and since market are trading below, they want back above and first target is to retest the 50% pullback price around 1.097 and then the small bear trend line around 1.1 to 1.105. They bought at the 2023-12 lows and their first target now is trading above 1.1084 and making higher highs again.
bear case: Bears see 3 clear pushes on the weekly tf for the bulls from the 2023-10 low to the 2023-12 high. They want their 3 pushes down to retest the 2023-10 lows now and one could argue, that they already had 2. We are probably working on a pullback currently and then market decides if bears get a third one below 1.06 or not.
outlook last week: “sideways to up. i can’t see bears strong enough for a breakout of the triangle. odds favor the bulls to form a lower high (to around 1.1) inside the triangle which would form a good looking head & shoulders pattern.“
→ Last Monday we traded 1.0785 and now we are at 1.0793. Does not get better than that. Hope you faded moves.
short term: sideways to up (very small up) - bulls probably get a bounce and then market decides for a third bear leg or up again to 1. target 1.097
medium-long term: sideways inside 1.058 and 1.105
What happens when you implicate SMC into an analysis.What happens when you implicate SMC into a macroeconomic analysis?
You get precision. Accuracy. RIsk to Reward superiority.
The ECB is likely cutting rates this year which most likely would lead to a rise in the currency.
In the chart above the following conceps are used to analyse:
- Premium / Discount
- Turtle Soup
- IPDA Data range
- Optimal Trade Entry
- Inducement
- Market Structure
- "Low Resistance" Liquidity
