EURUSD

I agree with you. Its making LH and LL.

I don't need to be the King or Queen(especially not the queen) of FX - Too much stress.

I'm fine being bishop or knight.

Mike

Deleveraging
The rise of the dollar versus the euro is not what many make it out to be. What is occurring is credit deleveraging by currency exchange rate ratios, a wealth transference mechanism well known to the moneychangers. Liquidity is being squeezed from whatever source will bleed. The dollar rising is not a sign of dollar strength – it is a sign of euro weakness. The Euro was grossly overvalued; after all, it is paper fiat debt-money, as are all currencies.
At any given time, there are no “strong” paper currencies, such is a misnomer. There are those that are less weak, nothing more or less. Little talk is heard regarding the yen; or for that matter – the Japanese stock market. How many times has the end of the bear market in Japan been prophesized to be over?
Election time is almost upon us. The barkers and pitchmen are plying their trade in full regalia. Colors are flying at full mast. No stone will be left unturned for their candidate to be the one – the all-mighty and powerful Oz.
The leading roles are waiting final approval, but the cast of players are hard at work, building the stages, platforms, advertising campaigns, and other outwards signs of names and things to be branded into a blitzkrieg of mass psychology, as the public stares – mesmerized by the court jesters.
How timely that the economy and markets have suddenly turned on a dime and are now headed in the politically correct direction. It would be hard to write a more favorable script. Call me doubtful – I don’t think it will last through fall. Once the elections are over – shoes will start falling.
One of the greatest wheels of leverage in the present credit orgy is the Yen. Yen carry trades have been disproportionally huge, and have been built up for years. They will not and cannot be unwound in a few weeks or months time – it will take years.
In the final analysis, the credit debacle can be dealt with in one of two ways: deflation or hyperinflation. The first wipes the slate clean so another game can begin. The latter ends the game, the way it was played, and that by which it was played.
As proof that the fundamentals have not changed and are actually getting worse, the following charts say more than mere words can begin to express.
http://www.financialsense.com/fsu/ed...p_image002.jpghttp://www.financialsense.com/fsu/ed...p_image004.jpg
Courtesy of Grandfather Economic Report
by Michael Hodges
In 2007, total debt hit 470% as a percent of national income. Is this how wealth is created – or debt? Who will pay this debt off – us, or our children and their children?
Isn’t this leaving them a legacy of debt, which means we are bringing them into a life of pre-ordained debt servitude from which they have no escape or choice? Does this sound like freedom – or slavery?
Debt increased $145,000 per person from 1957 to 2007. Presently, a household of 4 people has an accumulated debt approaching $600,000.00.
Not only is this digging a hole in which to bury ourselves, but our progeny for lifetimes to come as well. By whose design does this occur? Therein lays the answer.
Does this sound like the credit crisis is over – or just beginning? Is this a prescription for a strong dollar; or gold and silver coin - according to honest weights and measures?

Comments Are Welcome !!!


Bruce

Interesting As It Will Affect All Currency Pairs !!!

Figure 2
http://www.financialsense.com/fsu/ed...p_image002.gif
This is why it’s important to have diversified portfolios, because process will dictate which elements of the precious metals sector will perform at a particular time, and which ones won’t. In fact, and as pointed out in our last discussion on portfolio planning, it could be that the market needs to be cleansed of the multitude of start-ups that hit the scene over the past few years – companies with little to no chance of ever finding economic deposits while detracting from those that are either in development or will find such a deposit. And if we get the prolonged and dramatic downturn in the stock market / credit cycle that is suggested above in Figure 2, then we may see just that, with many juniors decimated this Fall due to failing liquidity / credit related conditions, which is why one must remain on guard with respect to this risk. What’s more, this is why holding only the highest quality juniors (like San Gold, Nova Gold, etc.) at this time is exceptionally important, because if stocks and commodities decline together this Fall for a period, the resulting deflation scare could do terminal damage to the weaker members of the group. These are companies with high cash burn rates and no means of raising capital in any market

Will the day end with some movement in EUR/USD ? Much more data out on Tuesday !

Will Gold hold ? Will Dow Crash ? Will there be a New Thing to Focus on ? ZEW coming soon !


Bruce

better stop talk gibberish and long some dollars if u wanna make some money.

At times like this at a round number level like 110.00 or support at 109.953 will have strong buying as you concluded. Then as the Dow improves from Bad to not as Bad it has a brief effect and causes USD/JPY to bounce.

It the Dow has INTERVENTION or recovers on it's own to say about 125 points down USD/JPY probably will bounce 25 to 30 PIPS.

On the other hand if we have a Sell Off and it goes down about 250 Points then USD/JPY will break 109.95

That has been the usual pattern in the past. EUR/USD now is also going down bringing USD/JPY up as well.


Bruce

P.S.

Now that options has expired, the yen carry traders will be taking profits next week on the stocks they drove up; and this will be a factor drawing down the US Dollar.
the housing such as Pulte Homes, PHM,
the value stocks such as Blackrock, BLK,
the financial stocks such as Nicholas Financial, NICK,
the consumer stocks such as Carnival Cruise Line, CCL and McDonalds, MCD.
the retail stocks such Home Depot, HD, New York And Company, NWY, and Childrens Place, PLCE.

I believe that the yen carry traders will be taking profits next week, that is beginning on Monday August 18, 2008, on the USD/JPY which has risen into a wedge to trade at 110.53 as seen in of chart courtesy of ActionForex.com.

Wedges, being inverted head and shoulder patterns, always break down; and the time is "ripe" for the USD/JPY to do so.

It's important to notice that GBPUSD just broke its lower trendline and EURUSD is going to break lower or upper TL any hour now. Both were forming triangles.

http://3.bp.blogspot.com/_nmIuQsC9b-...gServer+ee.png

http://www.financialsense.com/fsu/ed...2008/0818.html

Snippet:

When Fundamentals and Technicals Fail to Align
My read-between-the-lines of the current economic environment includes:

1. The Fed’s attempt to prop up the economy by lowering interest rates has not and is not working, which is no secret to anyone.
   The availability of credit is contracting which is exactly what the Fed was trying to avoid by lowering rates.
   Stock markets around the globe are not anticipating a significant recovery anytime soon.
   Banks still have serious problems with continued deterioration of their balance sheets caused primarily by falling home prices, which have no rationale hope for finding a permanent bottom anytime soon.
   The recent slide in commodity prices underscores the contraction of credit, housing outlook, and anticipated future economic weakness. This is not good for stocks.
   At least for the time being, financial markets are placing economic weakness and the possibility of deflation ahead of any concerns about possible future inflation.
   All asset prices, including commodities, are on the ropes.
   Based on the evidence we have today, a rapid reversal in the U.S. stock market is possible between current levels and 1,365 on the S&P 500 (now at 1,298).
2. A possible, but much less probable, outcome is for stocks to respond positively, in a rapid upside move, to falling commodity prices and break through 1,365. The basis for this scenario is that capital is flowing out of commodities and could rush into stocks if managers feel they are being left behind. The move could take the form of an upside "blow off" where the panic buying is quickly replaced with panic selling.

The concepts above appear to be supported by recent disconnects between some fundamental and technical elements in both commodities and stock markets.

http://imagehost.vendio.com/preview/...orthyOneII.gif

http://imagehost.vendio.com/preview/...eactionTwo.gif

http://imagehost.vendio.com/preview/...orthyThree.gif

Bruce

Still seems to be well bid in the 1.4690 region all day! Wonder who the buyer is

Actually - It's Deutsche Bank

m

http://www.forexfactory.com/news.php?do=news&id=101230

A break that is.

Deutsche Bank ???

That was a joke.

Deutche is the largest player in our sandbox.

I said that because they are one of the few players that can keep this dog afloat.

The next post had an article dealing with a very long trend line.

Should that trend line give Deutsche couldn't save this pair.

Mike

The Home Strech ...

Stay Tuned ...

EUR/USD Bid 1.4694
EUR/JPY Bid 161.74
USD/JPY Bid 110.06

Dow Down 216


Bruce

Some Day ... Tomorrow will come !

EUR/USD trying to go over 1.4700 into Japan and Europe !!!


Bruce

Oh I love it when it is right on the fence. Don't know which way it will go. Just LOVE it.

Grrrrr.....

Stick with the weekly trend Hehe. EURUSD hasn't broken support level's, so until then, I am long. Stops below 1.4660.

What they have drawn is an average trend line and I think we should not use it as a buy or sell signal, what do you think?