EUR/PLN Moving Higher?

The EUR/PLN pair isn’t one that a lot of Forex traders follow. This is too bad really, as it can be thought of as a nice “risk on, risk off” type of market. The Euro is of course the “safer” of the two currencies, as the Polish Zloty is a bit more of a peripheral type of economy. (Poland is indeed an up and coming economy though, and the interest rate is a nice 3.5% at the moment.)

The pair most certainly is one that has a higher spread, but one has to remember that the pip value is less than some of the more commonly traded pairs out there. The psychological issue of a spread is a bit of a misnomer for this exact reason. After all, the easiest way to overcome this is to simply trade higher time frames. This is more like an investment than a short-term trade. Not all trades have to be based upon the 15 minute chart after all.

Looking at the weekly chart, you can see that the EUR/PLN has just bounced off of a longer-term uptrend line this past week, and the 200 EMA has acted as support as well. The pair seems to have found the 4.15 level interesting in the past, so it stands to reason that it would now as well. The candle shape of the previous week is also a hammer, and we have broken above the top of that now – all things that will have me buying this pair.

Looking forward, I believe we could see this market aim for as high as 4.35, given enough momentum. In the meantime, I would expect little “hiccups” at the 4.20 level, the 4.25 level, and so on. The “500 pip” lines should continue to be of interest, but in the end, the Euro gaining is a reflection on a bit of trepidation on the part of investors at the moment. I think that a little bit of a pullback in risk appetite around the world could be coming, as more money will flow into “safer” currencies such as the Euro, Dollar, and Franc.

If you have the ability to trade higher timeframes, and to hang onto a position – this market could be one to consider. For what it is worth – this market has been grinding away to the upside since August of 2012. I don’t see this changing in the present environment.