Two trades to watch: EUR/USD tests 1.2250, TW as house prices rise 7.5% YoY

EUR/USD tests 1.2250 & holds uptrend in thin holiday trade ahead of mid tier US data later today. House builder Taylor Wimpey is on the rise after Nationwide reported 7.5% YoY house price growth.

Charts (4)

EUR/USD holds uptrend 

pushed higher in early trade to a peak, hitting fresh 32 month highs amid cautious progress of US stimulus bill. 

However, the risk mood is easing as reflected in a lower open for EU indices, although the tone surrounding the safe haven US Dollar remains weak.

No Eurozone data is expected, US Chicago PMI & Pending Home Sales could entertain traders later this afternoon, although those are not expected to be market moving releases.

Expect thin trade with many European centres closed including Germany, Switzerland and Italy 

Technical outlook
Technically, the pair trades comfortably over its 20,50 & 100 sma a bullish chart suggesting that more upside could be on the cards. Furthermore, the 20 sma has crossed above the 50 sma in another bullish signal.

EUR/USD pushed over the monthly high 1.2275 in the previous session, however struggled to move beyond 1.2294 a fresh 32 month high overnight, instead rebounding lower. 

The pair has crossed back below 1.2275 and is heading towards 1.2250 resistance turned support which has so far held. A break-through here could open the door to 1.2225/0 confluence 20 & 50 sma.
On the upside, a move towards the round number 1.23 could be eyed prior to 1.245

Learn more about trading forex.

Where next for Taylor Wimpey as house price rise?

According to Nationwide, UK house prices climbed 7.5% in 2020 the highest growth rate in 6 years after demand was buoyed by the Chancellor’s stamp duty holiday, furlough scheme and changing preferences amid the pandemic.

However, the outlook is much more uncertain, depending on how the pandemic evolves and the economic scaring suffered. Whilst the stamp duty holiday continuing until March means prices could continue to increase in Q1, rising unemployment is the obvious risk.

Technical outlook
Taylor Wimpey rallied hard in early November on vaccine optimism hitting a high of 172 before trending lower from mid November to 23rd December. The stock broke out of its descending channel scaling to 176 on 24th December after the Brexit deal announcement.

The pair trades above its 20, 50 & 100 sma in a bullish sign although has failed to find acceptance above 172 which acts as the immediate resistance prior to 176 and the 9 month high of 180p.

163/1 offers important support with 20 sma and upper band of the descending channel. A break through there sees more support at 160/59  50 & 100 sma, prior to horizontal support at 155.

Learn more about trading equities

More from Equities

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account