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PipTrapper Sep 25, 2011 5:16pm | Post# 1

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ATTENTION ALL LURKERS AND NEW POSTERS

BEFORE POSTING ANYTHING IN THIS THREAD, YOU MUST READ AND AGREE TO ALL THE RULES AND OBJECTIVES POSTED ON PAGE 1

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THANK YOU
~



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Welcome to EurAnalysis

Yes I know it sounds like urinalysis but in a way the purpose of this thread is to do more or less the same thing. The only difference is that instead of urine, we are analyzing the Euro against its most major counterparts.

I invite all participants to contribute what they know about the EUR/USD as well as any other Euro related currency pairs... and since everything is correlated nowadays, that pretty much includes all currency pairs, commodities and equity indices However, the main focus should be Euro crosses.

Before I get started with submitting my first post, I want to lay down the ground rules of this thread. I only have a few rules but they will be strictly enforced.


1. During busy market hours, please keep the discussions strictly on issues directly related to trading the Euro and any other instrument which influences (or is influenced by) the Euro. This can be technical analysis of charts and indicators, Fundamental analysis of political and economic factors which directly or indirectly affect the Euro and related instruments, or any other information you wish to exchange with others that you feel will be of help in determining general market sentiment or providing trade ideas. During off-market hours or slow periods, you are free to engage in any discussion that you feel the other thread participants would find of interest including humor and trivia. Just keep it clean please


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Any poster who violates any of the above rules, or ignores any instructions given by the thread starter & moderator (that's me), may be immediately blocked without notice. If I have found reason to issue a fair warning to you, it means you have already gone too far, so it is time for you to listen up and take notice. In extreme cases, I may even recommend to the FF administrators that your account be suspended or permanently banned... Yes, I have that power and I will use it at my discretion


Number of posters currently blocked by me for rule violations: 18


Number of blocked posters currently suspended or permanently banned by FF administrators: 2


That's it for now but I reserve the right to add more rules as I see fit. If you have any ideas to share about some rules that will keep this thread clean and resourceful for others, please feel free to submit them.

Peace

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The thread celebrities (courtesy of AFXFin)
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SOME POSTING GUIDELINES:

I have noticed that at certain times, there was some discussion about certain posts made by certain members wherein text from linked articles was copied and pasted in line with the post. More specifically, the comments were more directed at these members making several such posts in succession and thereby "spamming" the thread.

While I agree that any such successive posts seem somewhat abusive, I cannot agree that they do not meet the requirements or that they violate any current rules or guidelines in this thread.

However, I would like to point out that in the interest of fairness to all, I would prefer to see less successive long postings from any one individual. If you feel a need to make a long post, please allow some time after your post for others to post their views before making another long post. The alternative would be to keep your posts short, or if you have much to say on a variety of topics, then please include them all in one post.

I must stress that these are guidelines and not rules.
I want to encourage everyone to post their views as they see fit and if an external article or news item describes it better than they can, I see no harm in quoting excerpts from any such external links.

One more thing though, which I believe I have made clear in the past and is also a rule.
During peak market hours, especially from Europe open to US close, I would like to see all philosophical, speculative and historical discussions kept to a minimum as this is the time for fundamental/technical analysis and trade calls.

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DISCLAIMER:

Any trade or analysis related comments made in this thread by myself or any other person should not be interpreted as anything other than a point of view by the respective poster. It is your responsibility as a trader to decide what information to use and what to disregard and you do so at your own risk.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all traders or investors. Before deciding to trade the foreign exchange (Forex) markets, you should carefully consider your objectives, financial situation, needs and level of experience. The possibility exists that you could sustain a loss of some or all of your funds and therefore, you should not speculate with capital that you cannot afford to lose.

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Trader sentiment & positioning

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THINGS THAT MAKE YOU GO HMMM:

Attachment 1005469
Attachment 1009637
Attachment 1021903
Attachment 1021904

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RESOURCES:

This section lists a variety of resources for new and seasoned traders alike. I will organize it and build on it as I see fit but welcome suggestions any time.

EDUCATIONAL:
1. Baby Pips School
2. Raghee Horner's 'Best of the daily trading edge" e-book
3. Chart School from stockcharts.com
4. Explains by cnbc.com
5. John Murphy's Ten Laws of Technical Trading
6. Forex trading systems collection revealed!
7. Martin J. Pring’s 19 Trading Rules to Beat the Markets
8. Trading the Forex with Bonds - Part 1 - Part 2 - Part 3 - Part 4

MARKET CHARTS:
1. Futures from Finviz.com
2. Major Currency Pairs from finviz.com

MARKET NEWS:
1. Yahoo Finance Currency News
2. RTT News Earnings Calendar
3. Forex Factory Events Calendar

FF THREADS OF INTEREST:
1. Twelve widely believed forex myths
2. Trading with Deadly Accuracy

OTHER LINKS:
1. World Clocks
2. The Federal Reserve Bank of New York foreign exchange swap agreement web page
3. The latest 10 Year Government bond yields
4. The Swede's primer on options.

RISK ON / RISK OFF:
1. Overview of Risk On/Off
2. Following Example
3. Risk On, Risk Off and the Gold Trade
4. Risk On/Off and Global Currency Flows
5. Overview of Carry Trade
6. Baby Pip's Carry Trade Criteria and Risk
7. The Carry Trade: Get With It Or Get Run Over By It
8. Extra; Bonds and Quantitative Easing For Dummies

PRECIOUS METALS:
1. USA Gold

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SEARCH FOR KEYWORDS:

If you would like to search this thread for a particular post you previously saw that is of interest to you, you don't need to go through all the pages looking for it. The folks at Forex Factory have provided us with a good keyword search tool which you will find just above the first post on every page as a small box called "Search This Thread". Just type in your keyword and search. Try it, it's easy.

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SOVEREIGN DEBT MAP

Click to Enlarge

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http://www.nytimes.com/interactive/2...ro-crisis.html

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Links to Italian bond yields (15 minute delayed)

2 Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10 Year - 15 Year - 20 Year - 30 Year

Links to Spanish bond yields (15 minute delayed)

2 Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10 Year - 15 Year - 20 Year - 30 Year

Links to Greek bond yields (15 minute delayed)

2 Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10 Year - 15 Year - 20 Year - 30 Year

The latest 10 Year Government bond yields

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YOU MUST READ THIS:

Don't get trapped in a marriage you cannot handle.
Always use sound money management techniques.
It will save your account and your emotional well being.

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PipTrapper Sep 25, 2011 5:23pm | Post# 2

The long term approach
 
I've been trading forex for almost 10 years now. Back then it was a completely different market. If you had a 100 pip move in the EUR in a day, you were lucky. Things were much calmer and the retail forex market was smaller with much less liquidity and volume. Therefore, fundamental analysis and general market sentiment was more important than technical analysis. However, it didn't really take much effort to be a position trader. All you had to do was buy euros on every dip and let them all ride for as long as the fundies and sentiment pointed upwards. The only indicators I used back then were fibonacci tools, a 10ema and a 144ema.

Then came 2008 and everything changed. The markets became more irrational, less predictable and more challenging to stay in the game without more in-depth technical analysis. But that only applies to intraday trading.

http://204.91.39.22/images/eu-mn.gif

From a position trader's perspective looking at the very long term, if you look at the monthly Euro chart, I see the formation of a bull flag on its way to completing wave 5 downwards. My target based on this view is around the 1.12 handle which makes it a 61.8% retrace of the 2000 lows at 0.8225 to the 2008 highs at 1.6019.

Obviously these moves do not happen in a straight line so let's take a closer look at this same monthly chart. Right now I see that we are sitting on a falling trend line offering relatively medium support at around the 1.35 area (Where we are now). The monthly candle for September has significantly pierced this line, rebounded, and is now challenging it again.

From a purely technical perspective, assuming this area offers major support, the move further down is not likely to happen until the October candle and from this candle's lows at 1.3383 we should expect a rebound of approx 200 to 300 pips upwards to approx 1.3585 to 1.3685 (If we look at smaller time frames we would be able to more closely narrow down the targets but for the purpose of this post we will stick to the monthly perspective only).

The above mentioned 200 to 300 pip estimate is based on the monthly rebounds of similar long term trend line penetrations. More specifically the 2008 downward penetration of the long term rising trend line and the similar 2010 downward penetration of the newer long term rising trend line. (Refer to chart)

Now, without getting into too many specifics, let's add some of the current fundamentals and general market sentiments to the picture. I will provide some reference to some news articles which back up my following statements but I am not going to get too in depth here as it would take far too much space. This is just one post and not an entire thread. LOL

1. The situation in Europe is all doom and gloom and the politicians do not seem to be doing much about it. Every day more and more economists are calling for a Greek default. Politicians who were opposed to a default are now admitting that a default becomes more and more possible each day. They do not want a default because they do not know what the outcome would be and how much damage it would inflict on the economy. However, they are now starting to realize that kicking the can down the road just causes more uncertainty in the markets and in corporate & consumer confidence. This is not good for the global economy. Therefore, default or no default, the outlook is negative.
http://www.forexcrunch.com/greek-def...r-6-countries/
http://www.bloomberg.com/news/2011-0...om-europe.html

2. The growth forecasts have once again been adjusted downwards. The ECB will eventually have no choice but to reverse its rate increase of 0.5% earlier this year. This move will probably come at the next ECB council meeting and be reflected in the October rate statement. The only question is if it will be 0.25% or the full 0.5%.
http://www.reuters.com/article/2011/...78M03Z20110923

I think I've said enough for now. I suggest you keep your eyes on the news section and perhaps tune in to CNBC and/or Bloomberg to get a better sense on what is going on out there. You don't need an economics degree to figure it out. The writing is on the wall and the technicals support the fundamentals as well as the general sentiment.

In conclusion, we should all realize that nobody can predict what is going to happen. We can only make our next trade decision based on the best information available to us. The best chance of a trade being successful depends on how all three analysis methods line up with each other. Confluence of everything, just like when all your technical indicators point to a specific direction. If you ignore the fundamentals, you're not doing a compete analysis and your chances of loss increase.

Happy trading and good green profitable pips to all.

Peace

AaronWard Sep 25, 2011 7:15pm | Post# 3

Whats next
 
PT interesting, I am curious, what happens after 1.1? Does the bull flag carry out its potential and rise to 1.8 by about 2016?

PipTrapper Sep 25, 2011 8:45pm | Post# 4

PT interesting, I am curious, what happens after 1.1? Does the bull flag carry out its potential and rise to 1.8 by about 2016?
Hi Aaron. I guess we will have to wait and see when the time comes. However, if it all plays out that way, I would say 1.78 by 2015. But that's just a very loose projection assuming the Euro will still be around as we know it.

PipPipPip Sep 25, 2011 9:01pm | Post# 5

Equities have already loss back it's year's gain. Same with EU, we are back at beginning year's start. in couple weeks, EU will tank to 1.28-1.31, and we should see some professional support there holding for the rest of the year.

PipTrapper Sep 25, 2011 9:18pm | Post# 6

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If the Asian markets are gong to set the pace for this trading day, it doesn't look good right now.

CHART: Nikkei 225
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DizzleFX Sep 25, 2011 9:24pm | Post# 7

Yes I know it sounds like urinalysis
Love the approach! Will be fallowing!

PipTrapper Sep 25, 2011 9:40pm | Post# 8

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One thing to keep in mind now, even though I am very bearish and expecting the eur/usd to hit the 1.28/1.29 level by next week, we need to be very cautious if price breaks the low of 1.3383 as it still has to come back to test the H1 144ema or channel resistance around 1.3650/80 area.

It may not happen till later in the week but I believe it will happen before it heads down. There is major support all over that 1.3380 level. I suspect there is lots of demand there.

If you are scalping, use caution. This is why I am not buying anything and I am only selling aggressively rejected peaks.

Playing it safe.
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PipTrapper Sep 25, 2011 9:44pm | Post# 9

Love the approach! Will be fallowing!
Welcome and thank you DizzleFX. Glad to have you as a follower. Feel free to contribute your thoughts also. We are all here to share and learn.

Peace

AaronWard Sep 25, 2011 9:49pm | Post# 10

Hi Aaron. I guess we will have to wait and see when the time comes. However, if it all plays out that way, I would say 1.78 by 2015. But that's just a very loose projection assuming the Euro will still be around as we know it.
Approach to monetary policy would support this. Europeans have first hand experience with hyperinflation -- guys making the decisions lived through it in the 1990s. US has not had a good bout of hyperinflation since the civil war. So regardless what the future brings, the Europeans will almost always raise their interest rates faster than the US, lower them slower, conduct QE later (if at all) and in smaller amounts.

The Euro might come to sudden end, but so far I have seen no sign from the people of the Eurozone, the politicians of the Eurozone, or the institutions of the Eurozone that they even see this as an option. The rhetoric against the Euro, has come mostly from the British and the Americans.

PipTrapper Sep 25, 2011 9:54pm | Post# 11

Equities have already loss back it's year's gain. Same with EU, we are back at beginning year's start. in couple weeks, EU will tank to 1.28-1.31, and we should see some professional support there holding for the rest of the year.
Thanks for contributing your views PipPipPip.
Looking forward to your continued contributions to this thread.

Peace

PipTrapper Sep 25, 2011 9:56pm | Post# 12

...The rhetoric against the Euro, has come mostly from the British and the Americans.
Would you expect anything less from them? LOL

Cheers mate

PipTrapper Sep 25, 2011 10:13pm | Post# 13

I'm off to get some sleep. I want to be awake for the European markets


PipTrapper Sep 26, 2011 3:47am | Post# 14

ECB's Nowotny says ECB interest rate cuts cannot be excluded.
Source: http://talking-forex.com/headlines/86706

foto Sep 26, 2011 4:11am | Post# 15

agree with you PT as that 133.80 level should be the institutional order area.
Was suprised that the 1.3400 level was breached this morning.
If selling remains agressive the instituitions would pull orders, leaving central banks and the likes the last support for the 1.3500 level.

It appears that an as of yet unapproved 1.75 trillion bailout is not enough to bolster confidence.

We may be seeing bailout fatigue as to effectiveness of policy and the perception of lower interest rates to come. Who will stay around for more of the same disfunction we have seen in recent weeks.

After all the denials, the size of the proposed bailouts speaks a lot for the lack of a better plan.

PipTrapper Sep 26, 2011 4:15am | Post# 16

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Price has pierced last Thursday's 1.3383 low this morning but was quickly rejected by the previously mentioned strong support (Demand) below this area.

I am looking for a possible bounce back up where I expect some resistance (Supply) to kick in at around the 1.3445 area and after a little pullback to 1.34, a farther advance up to the 1.3485/95 area.

Update: The initial move up and pullback were much shallower than anticipated but the bigger move is still in play.

Update: Uploaded new chart showing current price.
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PipTrapper Sep 26, 2011 4:28am | Post# 17

agree with you PT as that 133.80 level should be the institutional order area.
Was suprised that the 1.3400 level was breached this morning.
If selling remains agressive the instituitions would pull orders, leaving central banks and the likes the last support for the 1.3500 level...
Either way you cut it, even if the 2 Trillion plan is approved and all the "at risk" banks are ring-fenced, the Euro will still take a hit. Why? Because the ECB will still have to cut rates and eventually start buying unstertilized periphery bonds. That amounts to increasing the ECB's balance sheet; ergo quantitative easing.

AaronWard Sep 26, 2011 4:58am | Post# 18

USD
 
I think another important dynamic needs to be included. That is the USD. Last week looked like the Euro was bearish. But not really. It went up against the Canadian dollar. And pretty much stable against the pound. It is the USD that is surging. The Euro didn't fall below 1.35. It was the USD that broke through the 1.35 barrier.

This may sound excessively basic, but most of the times I lose money on the Euro, it is because I focus on the Euro and forget that the other half of the cross, the USD, is a volatile currency.

PipTrapper Sep 26, 2011 5:08am | Post# 19

I think another important dynamic needs to be included. That is the USD. Last week looked like the Euro was bearish. But not really. It went up against the Canadian dollar. And pretty much stable against the pound. It is the USD that is surging. The Euro didn't fall below 1.35. It was the USD that broke through the 1.35 barrier.

This may sound excessively basic, but most of the times I lose money on the Euro, it is because I focus on the Euro and forget that the other half of the cross, the USD, is a volatile currency.
Yes, you are correct. However, using the same argument, I could say that it wasn't the USD that was gaining strength but the CAD that was losing due to a freefall in commodity prices, due to slow growth or no growth expectations due to the ongoing debt crisis in europe which caused the Euro and the Sterling to lose value against the USD and the JPY. LOL

All together now... and the head bone is connected to the neck bone, and the neck bone is connected to the breast bone, and the breast bone is connected to the back bone, etc etc

Cheers

PipTrapper Sep 26, 2011 5:21am | Post# 20

If I suddenly go offline it's because I've lost electricity and Internet as we are currently experiencing a monsoon type rainstorm. In the last 10 minutes we had got at least 2 inches of rain and its still coming down hard.


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