The Hungarian Forint (HUF) is a relatively new currency traded at FXCM. Since FXCM began trading the EUR .HUF last year the pair has trended downward 2963 pips from its July 10th high of 291.90 Forming a new low on April 28th at 262.27 price has begun consolidating in a downward chunnel pattern during this weeks trading. Chunnel patterns are indicative of a breakout and traders should be on alert for potential volatility on the pair.
Hungary's fundamentals remain strong with Reuters reporting that Hungry had a budget surplus of 75.9 billion forints ($424.4 million) for the month of April. When paired with a debt ridden Euro Zone that is still struggling to restructure the debt of multiple member nations, the HUF looks poised to continue its trend.
Price Action
Moving price to a 4Hr chart we can get a better look at our consolidation pattern. Price has recently tested support in the past hour however failed to close below support. Aggressive traders can look to trade the inside of the triangle or patiently look for a breakout. The daily trend is down; however a break above our chunnel could potentially signal a reversal on the pair.
Trading O pportunity
My preference is to look for selling opportunities on a break of our trend line. I recommend using entry orders under the 263.00 level. Our initial stops should be set above our previous high at 268.00 or better. Our limit will look for new lows, with a minimum take profit target of 1000 pips for a clear 1:2 Risk/Reward ratio.
The EUR/HUF is an exotic pair offered by FXCM. You may need to add this pair to your subscription list using the symbols tab found at the top of your trading platform.
Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email [email protected] to be added to the distribution list.