Forex Trading Strategies for the USD/ILS Pair: Tips and Analysis
If you trade foreign exchange, you’re probably constantly on the lookout for possibilities to make a profit from your trades. In this post, we will walk you through the process of doing a technical analysis of the currency pair USD/ILS, as well as provide some advice to assist you in making profitable trades.
So, apparently during a hearing on the next state budget, Bank of Israel Governor Amir Yaron dropped a serious truth bomb by warning that an economic crisis could come out of nowhere. This news comes at a time when so many people have got serious concerns about the potential economic fallout, and the weakening shekel vs US dollar and other major currencies, due to the government’s judicial system overhaul. Plus, just a few days ago, the central bank raised its key lending rate to the highest level since 2008 in an effort to fight off inflation and a weaker shekel.
It’s all a bit weighing on the Israeli curerncy, to say the least. The USDILS pair is up a staggering 17.5% since its low in the summer.
USDILS technical anaysis on the weekly timeframe
The examination of the USD/ILS currency pair reveals a bullish pattern that only just emerged after breaking out of a consolidation period. This breakthrough might result in the creation of an ascending triangle, which offers traders two distinct opportunities to join the rally, depending on their preferences. But they need to be careful not to join right away since the forex pair might very soon be extended.
In the first possible outcome, there is a break above the red resistance on the upper band, which is then followed by a retest somewhere around 3.557. After the retest, buyers might enter the market with the expectation of a potential reward of climbing all the way to 3.888 but with the danger of falling below the 3.4 price level. This gives a reward-to-risk ratio of 2.5 to 1, which is quite favorable.
Waiting for a price retreat below the top band and then entering a long trade when it reaches that level is the second possible outcome of this scenario. This is a fantastic chance to make a purchase, with a possible return of 5:1 on the table.
Most news is noise for technical traders, but there are exceptions, and this is one
At this time, IMO, while trading USD/ILS, it is important to stay on top of fundamental news since it may have an impact on the market. For example, to follow what happens with the next votes on this possible reform. It must pass 3 readings in the Knesset – the Israeli house of representatives – and it passed the first one. Assuming that passing the next reading will help the dollar gain ground against the shekel, this is a case where following news can help the technical trader, too. Another example is to follow the Israeli Central Bank that may heavily purchase shekels in order to strengthen the shekel, which may result in a decline in the value of the forex pair.
Those that still do not want to follow the news, and want to stay purely technical, can work with alerts on the chart, or ‘buy stop’ orders. A buy stop order is an order to purchase a security at a price above the current market price. It is used by traders to capitalize on potential price increases, such as in breakout trading strategies. The order becomes a market order when the specified price level is reached, but there is no guarantee of execution at the desired price, especially in volatile markets.
As the USDILS technical analysis video shows, it is recommended (even for buy and holders, and non traders) to make purchases in increments and save some funds in anticipation of prices falling further. AKA to average out a lower entry price. A method that may help decrease risk and maximize rewards is one that takes advantage of price fluctuations along the road and averages out partial gains and losses.
Conclusion: USD vs Shekel is strong and focus on the entries
In conclusion, the technical analysis of the currency pair USD/ILS reveals a bullish formation, which reveals two different trading scenarios as potential outcomes. Traders should also be abreast of fundamental news that may have an impact on the market and buy in gradually, providing opportunity for prices to fall. The video above shows where these entries can be made. Traders may maximize their risk-reward ratio and increase their chances of being successful if they follow these suggestions, but they must keep in mind that they are trading at their own risk and this is just another opinion. Visit ForexLive.com for additional views.