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  • #210,841
  • Mar 14, 2010 8:25am Mar 14, 2010 8:25am
good stuff.

Quoting ThePipsMaker
Expected for the week...
  • #210,842
  • Mar 14, 2010 8:49am Mar 14, 2010 8:49am
The Problem with the Euro

(source - www.economicshelp.org)



The Euro is a bold experiment to create the largest curreny area in the World. The Eurozone is a diverse area and whether it is an optimal currency area is a matter of debate.

The Euro involves:

 

  1. A single currency within the Eurozone area.
  2. A Common Monetary Policy. Interest Rates are set by the ECB for the whole Eurozone area.
  3. Growth and stability Pact. Limits on government borrowing, national debt and fiscal policy. However, in practice member countries have often violated the strict limits on government borrowing.

Problems of the Euro.

 

  1. A common monetary policy involves a common interest rate for the whole eurozone area. However, the interest rate set by the ECB may be inappropriate for regions which are growing much faster or much slower than the Eurozone average. For example, if the French economy was in a recession, it would benefit from lower interest rates to boost demand. However, France no longer has the flexibility to be able to cut rates. Therefore, it could be stuck in a recession and not able to cut rates.
  2. Not an Optimal Currency Area. If a state in the US like New York was in recession, it is argued that people in New York could move to New England and get a job. However, in the Eurozone this is much more difficult; it involves moving country and possibly learning a new language. There are more barriers to the movement of labour and capital within a diverse region like Europe.
  3. Limits Fiscal Policy. With a common monetary policy it is important to have similar levels of national debt, otherwise countries may struggle to attract enough buyers of national debt. This is a growing problem for many Mediterranean countries like Italy, Greece and Spain who have large national debts. For example Italy's national debt is over 100% of GDP.
  4. Insulation against Currency Crisis. It is argued that being a member of the Euro protects a country from a currency crisis. Therefore, there is less incentive for countries to implement structural reform and fiscal responsibility. This is even more important given the fact that devaluation is not an option.
  5. No Scope for Devaluation. Euro countries are locked into the fortunes of the Euro. The Euro has been appreciating sharply in recent months because it has become an alternative to the dollar. If the Euro became the World's reserve currency its value could appreciate even more. However, the strength of the Euro is creating problems for European exporters and the European tourist industry. The appreciation in the Euro could start to harm prospects for economic growth in the Euro Zone. The main problem is that there is no flexibility for depreciating. This is also a problem for countries with large current account deficit. Traditionally, devaluation is a solution to current account deficit because it makes exports cheaper, but European countries have lost this as a possibility.

Prices oscillate, trends persist. Trend is your friend.
  • #210,843
  • Edited 9:37am Mar 14, 2010 8:57am | Edited 9:37am
Quoting SkyzerFX
Another interesting chart to think about I have Butterfly

on USDCHF H4 (isn't she beautiful?), so pair more likely should go up, as it's oversold.

So on the one hand EURUSD must go up as well

Look:
Dear Sky, I don't have good news for your Butterfly.....There's this giant hungry BAT behind her.

http://www.forexfactory.com/showpost...&postcount=234
  • #210,844
  • Mar 14, 2010 9:00am Mar 14, 2010 9:00am
BNP Paribas: To Save Europe, Devalue The Euro Faster Than Americans Can Devalue The Dollar

(Source - www.businessinsider.com)


Vincent Fernando | Feb. 18, 2010, 9:04 AM

Perhaps it's time that Europe took a page out of the American playbook -- devaluing the euro could ease Europe's economic problems, according to BNP Paribas:

BNP via Alphaville:

Germany and the Netherlands are probably the only European countries which could afford to transfer funds, but it seems to be politically suicidal for both governments to agree to a bailout. It becomes increasingly clear that a sharp decline of the EUR (compensating Germany and Holland via export profitability) could be part of a European solution.

Thus you're compensating Germany with an export boost for its potential cost of bailing out weaker nations. The beauty of this weaker euro solution is that Europe's debt debacle may have already inadvertently made it even more likely to happen. The only challenge is to devalue the euro faster than America can devalue its own dollar, to which the deadly Chinese yuan remains hitched.
Prices oscillate, trends persist. Trend is your friend.
  • #210,845
  • Mar 14, 2010 9:02am Mar 14, 2010 9:02am
Solution is parity.
Prices oscillate, trends persist. Trend is your friend.
  • #210,846
  • Mar 14, 2010 9:15am Mar 14, 2010 9:15am
too long a wait. I need to retire next year price showing me 13754 at the moment just set a stop at 3715 and go to sleep, wake up tomorrow to 3825

Quoting jsspmk
Solution is parity.
Its all in the mind.
  • #210,847
  • Mar 14, 2010 9:17am Mar 14, 2010 9:17am
Quoting TheLastCoke
Dear Sky, I don't have good news for your Butterfly.....There this a giant hungry BAT behind her.
Heh, OK, - Thanks man, great chart there, as always..
Viewer Discretion Advised: Shall we shag now or should we shag later? :-)
  • #210,848
  • Mar 14, 2010 9:21am Mar 14, 2010 9:21am
4 hour chart from last 6 or so weeks. EU has been bought in bucket loads 6 times in last 6 weeks. see the red segments and the volume-price relation. If this is not classic accumulation, I dont know what else is
Attached Image (click to enlarge)
Click to Enlarge Name: snapshot-4.jpg Size: 154 KB
Its all in the mind.
  • #210,849
  • Mar 14, 2010 9:23am Mar 14, 2010 9:23am
Quoting jsspmk
Cheers!

I believe that the main time frame that identifies intermediate trends is the weekly chart & daily therefore serves as a trade entry chart. Hence when I post my outlook trend is still down I am referring to the weekly chart. If I was to bank on daily signals for change in the intermediate trend, then I would be dealing with forecasting/frontrunning, waiting for weekly chart to signal trend change is dealing with facts on the other hand. These facts are not holy grail in the trading world, but statistically weekly chart's levels are more...
good post.
  • #210,850
  • Mar 14, 2010 10:07am Mar 14, 2010 10:07am
My view on the market is from a pure technical view and my cycle high was due Friday and we popped up as predicted. The question is, do we pop up a bit higher tomorrow (my favorite view) to around 1.3830 then drop. Or do we drop as the high on Friday was exactly the same number of pips up as the retrace in this big downtrend (22dn Dec up to 13th Jan). Either way, i will sell on the breakdown, or line up sells above 1.3820.

The next cycle low is the 21st March, we could drop to 1.32 by then. If we do then we can have a very big bounce from mid march.
  • #210,851
  • Mar 14, 2010 10:09am Mar 14, 2010 10:09am
Quoting malcolmb14
I take that bet .... what are the terms. I.E at what price will EU continue downtrend ?
Well...
I say we going 1.32
You say we going 1.45

The winner will get vouch
We have 2 different views and everyone have faith about his view so
Let's see if Daily can close above 1.39
  • #210,852
  • Mar 14, 2010 10:13am Mar 14, 2010 10:13am
Quoting maran83
Goldman Sachs Says Buy Euro as Greek Concern Eases

http://www.businessweek.com/news/201...-update1-.html


I am already long, just need YOU to go LONG, for that little push. :-)
Wasn't Soros short EUR/USD ?

Who would have thought.
Rule No.1: Never lose money. Rule No.2: Market is always right !
S&P 500 WTI/USD
  • #210,853
  • Mar 14, 2010 10:21am Mar 14, 2010 10:21am
Quoting zarraman
Why do you say that? 3740 looks like a random line. What is special about 3740?
really do not know but look at this weekly

Attached Image (click to enlarge)
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Blogging daily now at www.volume.zone
  • #210,854
  • Mar 14, 2010 10:33am Mar 14, 2010 10:33am
I will be aiming in this zone this week, there could be a good dip to 1.370x to buy from. Anything souther is pretty much dead and back to range.
Attached Image (click to enlarge)
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  • #210,855
  • Mar 14, 2010 10:33am Mar 14, 2010 10:33am
Quoting jsspmk
So far daily is not that strong, I don't understand why so many believe we are going above 1.4, just because Greece will get a loan now? Because shorts will run for the hills seeing a green candle? Euro is in a bear phase & will remain so until higher resistance is taken & price settles above it. Stop getting aroused about a possibility of a bounce in a down trend, might as well wait & short, rather than buy against the trend. Look how MACD has been rising on USD monthly chart, doesn't that say anything to you?
I am a bear overall like you. BUT I cannot and will not ignore the bullish signs on the charts right now.

So far you have argued that eurozone this and eurozone that but not one technical reason . Any chance you could post a few charts so we can see why you are arguing the bear scenario so hard.

Right now we have a really nice rounded bottom on weekly just under resistance line March 2009 and as of Friday we just peaked back about it. It almost looks like a big fake out to me long term . Last 3 weeks have had higher closes , although the first 2 the closes were only just higher.

I just cannot get my head around why this should drop UNLESS there is one more shake out of weak longs , much like what happened in GU 2 weeks ago with a 400 pip one day. If at this point on euro I see that I will be long with an over leveraged position.

So far I have seen ' no way can euro go to 1.4500' . The chart below shows what euro can do and might do. In 2008 it moved 1000 pip in a week on a short squeeze. Try selling into that all week and by the end of week the account will be gone (not your but for newbies that overleverage and do not have the best MM).

Attached Image (click to enlarge)
Click to Enlarge Name: chart1968.png Size: 182 KB
Blogging daily now at www.volume.zone
  • #210,856
  • Edited 10:39am Mar 14, 2010 10:34am | Edited 10:39am
...of using charts for predictive purposes.
1) Lines drawn on charts usually reflect the underlying (even if subconcious) predjudice of the person drawing them.
2) The choice of points on charts is highly subjective.
3) Chart's aspects can be considerably skewed by changing timeframes and scales.
4) Any chart, at any time scale, which relies on a point within the last 10 bars is irrelevant for prediction and can only be used for confirmation.

I think you may be right, but the chart doesn't prove it. The Euro is too new a currency to apply monthly time scales to it. I does not have enough history.

Quoting crazy horse
i will be using this channels for the rest of the year and future
Ah Luv the smell of a good prediction in the mornin!
  • #210,857
  • Mar 14, 2010 10:37am Mar 14, 2010 10:37am
China is hedged with gold ..... even if usd breaks down they will lose nothing . Do not let this news stuff fool you. It is there to just manipulate the markets. Everything we need to know is in the chart

Quoting The Fool
http://finance.yahoo.com/news/China-...76369.html?x=0

BEIJING (AP) -- China's premier expressed concern about the U.S. dollar and called on Washington on Sunday to take "concrete steps" to reassure Beijing about the safety of its huge Treasury bond holdings.

"Any fluctuation in the value of the U.S. currency is a big concern for us," Premier Wen Jiabao said at a news conference. "We cannot afford any mistake, how slight it is, when running our financial assets," he said. "I would like the United...
Blogging daily now at www.volume.zone
  • #210,858
  • Mar 14, 2010 10:38am Mar 14, 2010 10:38am
Quoting malcolmb14
really do not know but look at this weekly

Attachment
http://www.forexfactory.com/showthre...14#post3549414
DEAL?
  • #210,859
  • Mar 14, 2010 10:44am Mar 14, 2010 10:44am
Quoting DMA Trader
Wasn't Soros short EUR/USD ?

Who would have thought.
I always said why the hell would Soros come on TV saying he was short and selling euro and did he even say he was selling at 1,3500 ? One reason is that most ' traders' (I use that term lightly as they are really sheep that follow any calls they see on TV) were likely trying to sell the euro at 1.3600 for long term upon seeing Soros was selling. In the meantime and very clearly from the 4 hour , as I have been showing over the last 3 weeks euro is getting massive accumulation at these levels. Soros coming on TV saying he is selling Euro , likely he is , but not from 1.3500....

He is likely selling at 1,5000 or higher. building long term positions.
Blogging daily now at www.volume.zone
  • #210,860
  • Mar 14, 2010 10:45am Mar 14, 2010 10:45am
Quoting egkid
Well...
I say we going 1.32
You say we going 1.45

The winner will get vouch
We have 2 different views and everyone have faith about his view so
Let's see if Daily can close above 1.39

deal .. lol .

If I lose I need a break from ff anyway. It will be like intervention , drug rehab. I just wonder if I can go cold turkey though

LOL
Blogging daily now at www.volume.zone
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