EURUSD

This is the point I am trying to make.

If someone tell us Oil is going to go very high? You would think of the price either in terms of 1) round numbers 2) previous levels or 3) Benchmarks

Price would tend to move from one level to another because buyers and seller have these prices as their targets.

Time scale on a graph will show them as trend lines. Fibs will show you magic levels. All these is combination of price+timescale+square graph paper. Good visuals to see price action.

Can I take you up on that? I have many questions and would be extremely grateful for any guidance.

Okay, you have convinced me, moved s/l to 1.4040, all though I hope it is not necessary.

Well you speak conventional wisdom so there isn't much I can say without sounding arrogant. But I'm allow to take the p@@@ when it all goes tits up tomorrow.

no decent retracements on the past month

Looks like it's intent on taking out the previous high... guess we've got a northbound train tonight

Yes. The bigger question I don't have an answer is up to what level? Since no one knows the answer, the answer will be available from 1) round numbers, 2) previous levels, 3) buyer/seller equilibrium - a new consolidation/price level.

I am focussing on first two. These are 1.400, 1.4200, 1.4700 and 1.5000

By VeriteFX on May 21, 2009 5:53 PM | No Comments
Fundamentals and geo-politics hammer dollar and equities:

Today was probably one of the more wilder trade days I can remember from the past few weeks... the insanity, price swings, and volatility were completely driven by fundamental, geo-political, and monetary policy factors, all hitting the markets within a period of about 12-hours.

For today's update we're going to look at what's going on with the dollar, Wall St., crude, and the pound sterling. They are all inter-connected and all lead directly back to fundamental and monetary policy factors which drive risk appetites, market sentiment, and money-flows.

US dollar--

The normal correlation between the USD and the S&P 500 became totally disjointed and uncorrelated today. This is not a fluke or random coincidence and the explanation is about as simple as it gets... the disjointed price action between the dollar, euro, and equities is directly connected to what we talked about in yesterdays update in regards to the message the Fed sent the markets through the latest FOMC Meeting Minutes.

I don't want to repeat what I explained yesterday, but the market was simply doing what the Fed told us to do -- keep selling the dollar. When the Fed says to sell the dollar, the market sells the dollar no matter what. There is no greater force than the Fed and the Fed always gets what the Fed wants. The Fed's message to sell the dollar was about as clear as it's been in recent history and market participants responded accordingly, despite a sell-off in equities.

It's not a coincidence that the dollar has been sold-off almost non stop since 1400 EST yesterday. That's when the FOMC minutes came out and since then the dollar and USD Index have done nothing but devalue. No trader on earth has the liquidity to fight against these kind of fundamentals and monetary policy issues because there's almost no risk in selling the dollar when you know the central bank give its full blessing to do so.

When the Fed says "please sell our currency, please devalue and depreciate it" that's exactly what's going to happen. It doesn't matter what any analyst, chart, or tech indicator says, the dollar will get sold-off and any trader that fights against this gets steamrolled. There's not really much more to add on this topic, it's as clear. And for the ten kabillionth time I'll repeat the same mantra I've been repeating for a month -- DO NOT BUY THE DOLLAR. It's not worth fighting the fundamentals, the monetary policy, and the actions of the Fed.

I'm writing this part of the update with a very serious tone because based on all of the emails I've received today I know traders tried to fight the Fed by shorting the euro against the dollar last night and early this morning. All I can say is, when I repeat something like don't buy the dollar every day in every update, there's a reason why... for those that are asking me what they should do with their EUR/USD shorts, I have no idea what to say on that.

The only thing I will say is that I do expect a retrace and pullback after this week's run-up. How much of a pullback? I have no idea, that's not anything I can predict. It's possible the euro could be looking at a retrace to the 1.3820 level at the minimum, possibly even further but it will require market participants to book profits on their euro longs going into the weekend. At this point I just don't see market participants not continuing to buy the euro on the dips.

If you're one of those that emailed me about your struggling euro shorts, the first time frame you may get a EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY pullback is between 1930 EST and 2030 EST tonight. So my best advice is to be in front of the market at that time because you may get your chance. The next time frame after that could bring a potential pullback is between 0300 EST and 0630 EST. There's a potential to see profit-taking and book squaring during that time frame and should market participants book profits on their EUR/USD longs, the euro will come lower. The next time frame after would be between 0930 EST and 1200 EST on Friday when another round of profit-taking and book squaring can occur.

The last thing I'll add on this issue -- do not be fooled by what you're seeing with the euro. The euro is not strong, this is not a euro strength story at all whatsoever. This is purely a dollar weakness scenario fueled by the Fed. If the ECB were to tell the markets to sell the euro like the Fed did to the dollar, the euro would be getting hammered right now. The Fed and ECB play a game of see-saw, that's just the way it goes. Don't fight it.

Notch, you probably misread a portion of my earlier post. I am not saying it won't go up (or down). I am of the opinion that if it crosses 1.4000 it will be either in a momentum or for going further higher. But these are just my views. As I mentioned I have these levels 1.4000, 1.4200, 1.4700 and 1.5000 for a possible decent retrace. Thanks for sharing your bias about pa.

im short at 13930 probably addimng more at 1.3950 lest see how it developes long term i guess euro buyers are to emotional for me at least market makers can not fool tecnicas much more

Ya...ya...I know but I have to say it!

Up 50 pips...2 pip drawdown since I posted the above alert. That's 230 pips via two trades I given to FF today plus the 200 (15 pip draw down - I think) yesterday and the - can't remember(maybe 100 - on Monday. I'm not arrogant but if you can't praise yourself then the haters won't!

EUR-USD has taken out the high 1.3923 and is moving higher. No retracement in sight.

One thing to look at is the Stochastics on HOURLY, 4 H, DAILY charts are all above 90. So how far up we go from here is anyone's guess.

I am of the opinion that we should retrace soon. But if the stochastics gets "stuck" in over-bought area the price can continue to move higher.

IMO there are fundamental reasons over shadowing the technicals at this time and we will have to wait till they play themselves out.

Chicky, I just like a good ole debate. It helps me to think outside the box even if I'm playing Devil's advocate...I hope you'll get used to by outlandish style.

Anyway, goodnight.

PM'd you.

I am short around same spot too...3rd wave of bearish divergence...

need gold to break down below 945 for some momo. Oil ooks ready to roll over for a breather too...

getting burned again so far on short though

EDITL: Stopped out again - I catch have the move with teh right bias then give back with failed read...this is killing me

EU crazy rally for the past 2 weeks.... what's going on?

EUR-USD Technical level....

Notch, It was good exchage of views. This is the beauty of these forums. Thanks for the info and your help. Now I am trying to think outside the box

Good night my friend.

Chicky,

Thanks for saving my life.

Shamu

This is my support resistance



-----------------------

support resistance

.