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EURUSD broke above 1.3719 resistance and up trend resumed. Further rise above 1.3851 previous high is still possible next week. Near term support is at the up trend line from 1.3360 to 1.3550, and followed by 1.3550, only break below 1.3550 level will signal the reversal to the up trend. For long term analysis, EURUSD is in sideways consolidation to the long term up trend and will move without trend in a range between 1.3262 and 1.3851. Up trend will resume after consolidation and rise towards 1.4300 to reach the next cycle top on weekly chart is still possible.

Right now-we have DX index that has broken 80-a very important psychological level. The fed lowered the overnight rate to 4.86% on Friday(last date for which the fed publishes info). Trichet and some of the other ECB's have mentioned that they're not finished tightening and Trichet himself labled monetary policy "accomodative".

It's no big mystery here that everyone and their grandmother is eyeing 1.3852 (all time high). Odds are that EUR/USD will work it's way slowly towards that area where it will likely find some resistance. It could test there a few times before breaking thru. No doubt that a sustained break will have everyone talking about 1.40 especially if it breaks the all time high, retraces and then finds support in that area.

Sounds like music to me.

all time highs, the breakout systems are going crazy right now! LOL

EUR USD broke 1,3850 resistance. EUR USD is in an uptrend supported by 1H exponential moving averages. The volatility is low. ForexTrend 1H, 4H, daily is in a bullish configuration. 1H, 4H ForexSto (Modified Stochastic) indicate a bullish pressure on EUR USD. The uptrend should continue to gather momentum.

OK-so far there are about 80 pips on this trade. It seems to ne running out of steam for now and i'm watching for any serious unwind which will be fueled by a sell-off in equities

I closed out my trade from 3500 , this morning. This is from the post about 3 weeks ago i made in Jacko's thread. I am feeling this is a weekly exhaustion area and the market will decline from here a bit. I just don't have confidence for an upswing. I think it will decline to the weekly trend line and then who knows, it could advance again.
http://www.forexfactory.com/showpost...&postcount=636

Hmmmm moving a little bit slower than I had expected.

LONDON (Thomson Financial) - European government bonds were a touch weaker after yesterday's hawkish comments from the European Central Bank, although ongoing concerns about the US economy ensured they remain at elevated levels.

Yesterday, ECB president Jean-Claude Trichet told the European Parliament that euro zone monetary policy is still on the "accommodative side" -- fuelling expectations that interest rates could still go up despite the turmoil in credit markets.

He also said investors who "behave improperly will have to pay the price of their mistakes", suggesting the ECB is in no mood to bail out investors with a rate cut.

This contrasts with expectations for multiple interest rate cuts from the US Federal Reserve Bank, starting with a quarter or half-point cut next Tuesday. The benchmark US interest rate is currently 5.25 pct but markets are expecting rates to be as much as one percentage point lower by the year's end.

The Fed is expected to cut rates in response to growing signs the US is heading into an economic slowdown and maybe even a recession, indicated most starkly by Friday's shockingly low non-farm payrolls report which showed the number of jobs in August fell for the first time since 2003. Fears of a slowdown prompted major safe-haven flows into assets like government bonds, which spiked higher on Friday and Monday.

At least you have a fairly sound fundamental reason for going long in EUR/USD for a longer term trade. Frankly I would love to hear more language like this from Bernanke.

Trichet has provided liquidity, because that is the function of a central bank when liquidity gets squeezed. But it should also be a function to point out where it sees problems and excesses in the markets.

It still comes down to the fact that no one heeded the fed's words last year when they were warning on housing. If Bernanke made a mistake perhaps it was in not being more forceful in his message.

From a very short term perspective, I would guess that the real story for the next few days is whether Eur/Usd touches 1.40 Not from any fundamental perspective - I think the current risk re. mispricings could be at least as damaging to Europe as to the US, and Putin is beginning to throw his weight around a bit, which usually isn't good for the Euro. The short term risk is from possible major options at (or just above) that level. The problem is that we - at least I - don't know when they roll off, since they may be customized; Philadelphia physically settled options & futures expire on Friday. Could be fun and games till then.
Philly expiry dates:
http://phlx.com/products/expcalendar1.pdf

Most of my analysis shows a the dollar making huge gains against the Euro. Which, from a dollar stand point, doesn't make any sense. However, given that there are two sides to the pair, as Halifax pointed out, the euro is somewhat fragile as well. There is also a very big player betting that the euro markets will crash.

http://www.financialnews-us.com/?pag...tid=2448565379

Nice post. No doubt many will see that article. If you look at the daily EUR/JPY chart, you'll see that EUR/USD found support on Friday at the previous peak of the mid June to Mid July uptrend. From a fundamental perspective I would say that a 25 basis point reduction along with a dovish statement could move the pair towards 1.42 because of the rate differentails and equity wind, but since I am really starting to believe in the likelihood of a recession occuring in a few months time, the concurrent equity unwind will drive the pair much lower-perhaps to where it began 2007 (1.30 area)

EXACTLY! I've been saying for the last year that the equity markets run up was a precursor to recession or even a depression given that everything in the US is debt driven and it was only a matter of time before there would be a credit crunch with the primary driving force being the subprime loans.

Actually, my leading indicator was the auto industry the last few years. All of those suv's on zero down zero percent financing from the major makers was a recipe for disaster given insecurity in the middle east and rising fuel costs. Couple that with the FED raising rates, cheap financing would soon become a ghost and that other rising costs including fuel and food ..which aren't included in the official formula for determining a recession, go figure... and eventually there would come a time when disposable income would diminish and the cost of upgrading to a newer suv would be prohibitive. This came to fruition and GM and Ford stock nose dived and their bonds were down graded to junk status.

So is it any wonder that the same has happened in the real estate and lending markets?

Not only that, the baby boomers are coming up to retirement age and I bet they'll be protecting their retirement assets which means pulling out of the equity markets if there are signs of a major correction.

Or perhaps attempting to cash in on their home equity. The real estate lending situation is pretty dicey and even those with excellent credit are having a hard time getting a loan. The money to lend is just not there. In fact, the FED pumped a few billion into the credit suppliers in order to provide some liquidity so the lenders would have something to lend. All at a cost of course. I love it how the FED creates paper money and gets paid back in hard money only to lend it back to us at interest telling us that they're bailing us out. FUBAR cycle if there ever was one.

Ok, way off topic now. sorry 'bout that. Attached below is a weekly chart showing a Gann grid adjusted to squaring a range of time going back to Oct 2002. The closing of this past week put price right on the 360° of time and 495° of price. I would be expecting a pretty significant correction from this point pretty close to your 1.30 area. I've got 1.8280 marked off as the first target. The cycles of time have been fairly accurate and I've circled in yellow where price turned. At least within a few bars. 6/8 ain't too bad and if price turns within the next few weeks it will be 7/8 correct.

The red ma looking thing is a price cycle forecast showing this past week as a major turning point. This price cycle shows one inversion,but the turning points were correct even though direction wasn't. The next turn isn't unitl the end of January. There is a bump around the end of November beginning of December. Again, inversions happen and I'm not sure how forecast them, but the primary key is the forecast change of direction and not necessarilly literal direction.

I thought I'd share some Euro analysis whilst debating whether to remove this 1kt thing.

Looking at the weekly (first chart), we seem to be in a rising wedge and approaching the upper resistance line. This looks like a nice reversal point and should hit somewhere around 1.3980. Should this continue down and break the bottom support line (below 1.3500) and further breaking the wedge, there is potential for this to return to base - being the 1.1600 region. This is a long term analysis that could evolve over some years.

Coming closer to home on the daily (second chart), we have a possible bearish harmonic in formation (AB=CD). Again, the potential for this pattern is many hundreds of pips to the downside (possibly to the bottom support line - 1.3550 area).

Therefore, a high probability short may present itself in the mid to high 1.3900 region with a stop somewhere above the psychological 1.4000 area (perhaps 1.4050). I'd say a minimum of 100 pips (back to around 1.3850) will be on the table although I'd be cautious around FOMC on Tuesday.

Z

The pair will appreciate if the fed lowers by 25 basis points and issues a dovish statement.

I am looking for another rally before a significant bearish correction. I am looking at 1.4000-1.4050 as a top. There is a significant weekly trend line up in that range.

Dave

While I have found late Friday Techs ( lower time frames ) to be a bit misleading.....Posting these to chew on for consideration.

Possible correction on the horizon??????

My position : FLAT ( for now )

Fxj

I believe the question of where EUR/USD will go will be found in LIBOR and in something you may not be used to looking at: 10 year German bond yields and the 2 year to 10 year spread.

The 10 year yield is the most sensitive to inflation expectations and it rose this week. The 2 year to 10 year bond spread has widened. Whether it continues to rise or not will be determined in 3 month (and longer) Euro LIBOR. If rates there remain elevated or rise further, 10 year German bond yield will rise, the 2 year to 10 year spread will widen and EUR/USD will continue to appreciate. Should the Monday LIBOR fixing show rates have decreased, expect the same to be seen in 10 year German bond yeild. The 2 year to 10 year spread will narrow. EUR/USD will fall in that case.

ECB officials stated this week that inflation is still their main concern. Trichet still is calling the overnight rate "accomodative". When interest rates remain low, growth is enabled and the likelihood of rising inflation is present.

The price over shot my top by about 70 pips. Not bad from daily/weekly chart projection. The overshot just means more money. I won't close longs untill a daily signal is given. The top weekly trend line is broke, and price remains above it. This puts 1.4500 with in reach. Don't be so fast to short even on 4 hr signals. A break out of this significance could lead to a further push higher by retail break out traders. The smart ones will buy on a dip, making short signals on 4 hr likely false signals.

Holding longs from 1.3660 and waiting for a top to be established.

Dave