TRADER MAGAZINE

JULY - SEPTEMBER 2018

THE FRACTURED POLITICAL LANDSCAPE IN EUROPEIS THE MAIN CHALLENGE FOR THE SINGLE CURRENCY

eurozone

A TIREDDOLLAR

tensions

CRYPTO IS THE NEWWALL STREET

FRACTAL TRADING

M O N ETA RY POLICY BEYOND INTEREST RATES

ESMA NEWREGULATIONS

BITCOIN A NEW

SAFE HAVEN

FXCONTENTs

IS BITCOIN BECOMING A NEW SAFE HAVEN ASSET?From digital safe haven, Bitcoin could evolve as a commodity, and finally a currency

47

The Dollar is key in the short term, but the big cycles are turning cautious44

07 EDITOR’S NOTE

MARKET WATCH 13 Unusual Currency Market Stability: A study of the forex market resilience to a large number of headlines on trade wars, geopolitical risks, and other topics that could unsettle the global economy

16 Retail Brokerage Regulations: The article explains ESMA new EU regulations and how they are reshaping the retail brokerage space for good.

CRYPTOCURRENCIES

09 Crypto is the Wall Street of

the millennials: The idea that Bitcoin will rise and rise along a path similar to the Nasdaq has solid fundamentals behind it

TECHNICAL ANALYSIS

40 Advantages of Trading with Fractals Indicator: Useful fractal strategies which you can implement on the FX market

35 Ichimoku Kinko Hyo: Analysis of past movements and future directions of major currencies and BTC with Ichimoku Kinko Hyo indicator

US DOLLAR OUTLOOK

29 Post - Dollar Bull Market: Medium-term Consolidations

Extended; Dollar Top Development into 2019

22 A Tired Dollar May Give Risk Assets a Breather: The author explains how to play the upcoming consolidation in the markets

TECHNICAL OUTLOOK

50 Summary of Key FX RatesEUR/USDGBP/USDUSD/JPYAUD/USDEUR/GBP

53 CONFERENCES AND SEMINARS

54 ECONOMIC CALENDAR

MONETARY POLICY BEYOND INTEREST RATES 25

EUROZONE TENSIONS

Can Euro area political turmoil keep EUR bulls in check?

FX TRADER MAGAZINE July - September 2018 3

Can Euro Area Political Turmoil Keep EUR Bulls in Check?

The fractured

political landscape

across the EU is the

main challenge for

the single currency

The coming months will

see many discussions

in the Eurozone and

what traders should be

looking for is consensus

The ECB timeline for

the end of asset pur-

chases and rate hikes

warrants caution for

euro bears

by Victor Golovtchenko

Is Quitaly back on the table and will the new Spanish prime minister’s socialist government manage to hold the reign? Merkel and Macron play with a common EU budget, but

can they turn it into reality?

We are now halfway through 2018 and the relentless euro bull, which has been in control of the market

until the second quarter of this year, looks quite exhausted. The single currency has been rallying throughout 2017 as the political turmoil that caused ripples across

FXFUNDAMENTAL ANALYSIS

FX TRADER MAGAZINE July - September 2018 25

FUNDAMENTAL ANALYSISFX

European financial markets throughout 2016 with Brexit was averted. Macron handily won in France, while German politics remained more of less boring. It is all changing in 2018 as the Italian election produced an u nprecedented backlash against m a i n s t r e a m political forces and is elevating populism to a new level.

Just a couple of weeks ago the Spanish prime minister Mariano Rajoy was ousted after years of battles with socialist o p p o s i t i o n parties. Pedro Sanchez from the Spanish Socialist workers Party is looking to steer the country to the left of the political spectrum and implement policies which might not be viewed favourably by its banking system bailout partners from the EU. The Spanish budget which aimed to bring down the public deficit below the common European Union ceiling of 3 percent is now unlikely to reach that goal. The establishment socialists in Spain hold just 84 seats in the 350-seat parliament and are proposing hikes in social security contributions in

order to finance a rise in pensions and civil servants’ pay.

In hindsight, the recent escalation in Italy and Spain looks like the main

trigger for the euro’s decline which has persisted for the past three months. Dropping from 1.25 to 1.15 is no small move and the hopes that the long-term euro bull is alive are still up with some traders. However, in order for the pressure on the euro to get reversed, we need to see some changes in market sentiment towards the single currency area.

It’s a Question of Unity

The end of June saw a rise in hopes for euro bulls as Macron and Merkel have finally proposed a common

Eurozone budget after years of resistance from Germany. But can a consensus be built across the wider block on this issue? There is a slew of unknowns when it comes

to building a consensus among all E u r o z o n e m e m b e r countries. How big should this common budget be, how will it be used by the block and how many countries aside from Germany and France will support it… All or at least some of these questions need answers before we see the next leg higher or lower in the

euro.

The fractured political landscape across the EU is the main challenge for the single currency going forward. The Italian election results delivered precisely what was feared by the marker last year when uncertainty about French and German elections weighed on the euro before it skyrocketed higher towards the 1.25 area. This year the faith of the single European currency will lie in the periphery of the Eurozone with Italy scoring a first major victory at the end of June

The political escalation in Italy and Spain seems the main trigger for the Euro’s

decline over the past three months

26 FX TRADER MAGAZINE July - September 2018