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EurAnalysis Kindergarten 24 replies

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  • #11,261
  • Nov 22, 2011 1:52pm Nov 22, 2011 1:52pm
Quoting Wulfgar
Seems the general consensus on FF is that the EU will spike up between 1.38- 1.42 then drop

That being said... I'm short now... Before the rug gets pulled out...

This IMF thing is a joke IMO... Just watch the bond markets...
  • #11,262
  • Nov 22, 2011 2:15pm Nov 22, 2011 2:15pm
Quoting Alorente
The 2 green bullish divergence arrows on the Trix plus both the Fast Trix and the Slow Trix green and both over 0 indicate the base is likely to resolve itself to the upside. The RSI down trendline is likely to be broken since the RSI is slowly climbing while the horizontal base is forming. The Daily chart also shows bullish divergence, The same patterns are showing on the S&P charts.
I see what you mean.

I am more inclined to call a range here though. Price is currently being capped by the 55sma and 55ema (thick and thin red lines on H4) and the 61.8% fibo level as well as the blue dashed falling trend line at 1.3550/60 area.

However, If it does in fact manage to break above all that, we have much stronger resistance at 1.3650/80 zone which will also be capped by the 200sma and 200ema (Thick and thin yellow lines on H4 chart), 55sma and 55ema (thick and thin red lines on Daily Chart) and further capped by the falling channel resistance.

In order to take price up beyond there we will need some very bullish market sentiment. In fact it will need to be some kind of breakthrough in the European debt crisis or a devastating blow to the US bond market like a definite announcement of QE3, which today in the FOMC minutes seems less likely.

Of course we have a US bank holiday and black Friday ahead of us this week. As we have all seen from the last few US bank holidays, the market tends to behave like school children with a substitute teacher. Therefore that could also be a good enough catalyst in a low volume market.

Still, I am more inclined to seeing price capped at 1.3550/60 for now with perhaps a spike to 1.36. If my inclination changes, I will certainly retract this statement and manage my trades accordingly.

Here are my H4 and daily charts.

Attached Image (click to enlarge)
Click to Enlarge Name: eu-h4.gif Size: 21 KB


Attached Image (click to enlarge)
Click to Enlarge Name: eu-d1.gif Size: 21 KB
Those who say it cannot be done should not interrupt those who are doing it
  • #11,263
  • Nov 22, 2011 2:18pm Nov 22, 2011 2:18pm
Quoting Wulfgar
Seems the general consensus on FF is that the EU will spike up between 1.38- 1.42 then drop

That being said... I'm short now... Before the rug gets pulled out...

This IMF thing is a joke IMO... Just watch the bond markets...
Oh I would love to see 1.42. Better shorting opportunity. But that's only a pipe dream
Those who say it cannot be done should not interrupt those who are doing it
  • #11,264
  • Nov 22, 2011 2:29pm Nov 22, 2011 2:29pm
Forex Trading After Thanksgiving

The Western world grinds to a halt before Christmas and re-awakens after New Year’s Eve and trading volume is very thin. This is well known and many people are on vacation anyway. Yet volume begins to drop well beforehand. The US holiday of Thanksgiving marks the beginning of the shopping season in the US and also sees the beginning of the decline of market activity.

Some currency pairs trade in narrower ranges due to the lack of activity, while others can experience volatile moves. Let’s see what we should be aware of.

Sleepers and Shakers

Currency pairs with higher volume on regular days tend to trade in smaller and narrower ranges. This includes EUR/USD, GBP/USD, USD/JPY and USD/CHF to some extent.

Less players mean less significant moves, but there are still enough players to keep the pairs moving in ranges. These ranges can provide opportunities for day traders, but they can be also be very frustrating and boring.

On the other hand, USD/CAD AUD/USD and NZD/USD have sufficient liquidity in normal days, but when the holidays approach, things can significantly change.

The volumes in these “commodity currencies” can become so low, that every small order can rock the price. For example, AUD/USD reached its year-to-date high of 2010 very close to the end of the year.

Technical barriers can be broken big time just to be followed by a retreat shortly afterwards. The moves can be very misleading. False breaks can become too common as soon as the beginning of December.

So, if you’re not on vacation and want to trade, it’s important to be very cautious. Traders can adapt to the markets by lowering trading volumes, thus limiting their risk.

And if this is too much for you, you can always take break, whether you are on vacation or not. A few days after New Year’s Eve, everybody returns to the markets, and behavior becomes much more “normal”.
Those who say it cannot be done should not interrupt those who are doing it
  • #11,265
  • Nov 22, 2011 2:31pm Nov 22, 2011 2:31pm
Daily Wrap - USD: Today was a quite day for the dollar index closing slightly down, with a bank holiday in Japan... http://t.co/zQc385r7
  • #11,266
  • Nov 22, 2011 2:35pm Nov 22, 2011 2:35pm
Quoting PipTrapper
I see what you mean.

I am more inclined to call a range here though. Price is currently being capped by the 55sma and 55ema (thick and thin red lines on H4) and the 61.8% fibo level as well as the blue dashed falling trend line at 1.3550/60 area.

However, If it does in fact manage to break above all that, we have much stronger resistance at 1.3650/80 zone which will also be capped by the 200sma and 200ema (Thick and thin yellow lines on H4 chart), 55sma and 55ema (thick and thin red lines on Daily Chart) and further capped by the falling channel...
PT, are you flat right now, waiting for 135.50 to go short?
Observation is the path to discovery.
  • #11,267
  • Nov 22, 2011 2:38pm Nov 22, 2011 2:38pm
Quoting Alorente
PT, are you flat right now, waiting for 135.50 to go short?
No I have 2 short positions at 1.7770 area and two very small positions at 1.3450 and 1.3485 area.
Those who say it cannot be done should not interrupt those who are doing it
  • #11,268
  • Nov 22, 2011 2:48pm Nov 22, 2011 2:48pm
Quoting PipTrapper
No I have 2 short positions at 1.7770 area and two very small positions at 1.3450 and 1.3485 area.
Thanks. I´ve opened a long position at 1.3506. Will probably close it around 135.55 (55 EMA) unless I see a clean break of the 55.
Observation is the path to discovery.
  • #11,269
  • Nov 22, 2011 2:48pm Nov 22, 2011 2:48pm
Quoting PipTrapper
No I have 2 short positions at 1.7770 area and two very small positions at 1.3450 and 1.3485 area.

I guess that's what you get when trading OTC
  • #11,270
  • Nov 22, 2011 2:50pm Nov 22, 2011 2:50pm
Quoting lumesh
I guess that's what you get when trading OTC
I´m sure he meant 1.3770.
Observation is the path to discovery.
  • #11,271
  • Nov 22, 2011 2:57pm Nov 22, 2011 2:57pm
Quoting Alorente
I´m sure he meant 1.3770.
yep I meant 1.3770
Those who say it cannot be done should not interrupt those who are doing it
  • #11,272
  • Nov 22, 2011 3:02pm Nov 22, 2011 3:02pm
Any more bullish sentiment during Asia? It certainly looks so to me.
  • #11,273
  • Nov 22, 2011 3:04pm Nov 22, 2011 3:04pm
Quoting michaelnew
Any more bullish sentiment during Asia? It certainly looks so to me.
Only if China decides to buy Euros or sell US Dollars (Both scenarios are highly unlikely right now)

ADD: Any moves in the Asian session tonight will be mostly commercial trade.
Those who say it cannot be done should not interrupt those who are doing it
  • #11,274
  • Nov 22, 2011 3:06pm Nov 22, 2011 3:06pm
One would think that the steps being taken by authorities would be designed to have a beneficial outcome.

But to be honest this pair is starting to give me a headache.
  • #11,275
  • Nov 22, 2011 3:07pm Nov 22, 2011 3:07pm
Quoting PipTrapper
Only if China decides to buy Euros or sell US Dollars (Both scenarios are highly unlikely right now)
I'm not betting on China this time, but on PA. Looks like the push on that stupid IMF news was strong enough to keep it above 1.35, so I assume we will find it on the same surroundings after Asia, even a few 20-30 pips higher, based on the same sentiment. It's not technical analysis, just an observation on how PA behaved after a positive news.

ADD: I covered all the shorts I had under 1.49 anyways...
  • #11,276
  • Nov 22, 2011 3:10pm Nov 22, 2011 3:10pm
The wedge that has formed on the H4 chart looks pretty ominous. IF PA breaks the top wall, which coincides with the 55 EMA, the price target is all the way up to 1.42 in about 20 days. This scenario lines up with the other indicators I mentioned earlier. Of course, PA can also test and break the bottom wall at 1.33, but it is something to watch closely in the next few days.
Observation is the path to discovery.
  • #11,277
  • Nov 22, 2011 3:10pm Nov 22, 2011 3:10pm
Quoting Alorente
The wedge that has formed on the H4 chart looks pretty ominous. IF PA breaks the top wall, which coincides with the 55 EMA, the price target is all the way up to 1.42 in about 20 days. This scenario lines up with the other indicators I mentioned earlier. Of course, PA can also test and break the bottom wall at 1.33, but it is something to watch closely in the next few days.
Here is the chart:
Attached Image (click to enlarge)
Click to Enlarge Name: eur-usd h4.jpg Size: 131 KB
Observation is the path to discovery.
  • #11,278
  • Nov 22, 2011 3:14pm Nov 22, 2011 3:14pm
From a bit earlier in the day:
German Finance Minister Schaeuble

EU can master crisis with existing instruments. Dec. 9 EU summit to give markets "clear" signal

ECB can't finance Euro-area governments

The whole Euro area faces lack of investor trust

U.S. debt will "still cause lots of concern"



This sounds like a plea not to abandon ship to this person.
  • #11,279
  • Nov 22, 2011 3:15pm Nov 22, 2011 3:15pm
Quoting Alorente
Here is the chart:
The wedge seems a bit forced to me, but I have to agree on the fact that the bear movement slowed dramatically, moving it into the ranging territory. And every time price is there looks like the only thing that really moves it (either up or down) is news.

And today's news was pretty obvious, like almost only directed at the markets: Italy, and possibly Spain, Greece and Ireland, may undergo some brutal changes, but we will support the powerful ones, meaning France. Germany doesn't need it anyways, so everything must be clear now. So, the real message was: IMF won't allow for contagion, it will isolate the bad apples and keep growing the good ones. And that should slowly move the price up somehow.
  • #11,280
  • Nov 22, 2011 3:37pm Nov 22, 2011 3:37pm
Quoting michaelnew
And today's news was pretty obvious, like almost only directed at the markets: Italy, and possibly Spain, Greece and Ireland, may undergo some brutal changes, but we will support the powerful ones, meaning France. Germany doesn't need it anyways, so everything must be clear now. So, the real message was: IMF won't allow for contagion, it will isolate the bad apples and keep growing the good ones. And that should slowly move the price up somehow.
Yes, this is all about trying to protect France's AAA credit rating. However, it will not stop the periphery bond yields from soaring. Today's Spanish 6 and 12 month T-Bill auctions were a perfect example.

The 6 month was 5.11% versus 2.29% last time
The 12 month was 5.227% versus 3.302% last time

and it's not over. This is what we have coming up in the next 5 weeks...

--Friday, Nov. 25: Italian T-bill/zero-coupon bond auction.
--Tuesday, Nov. 29: Italian bond auction.
--Thursday, Dec. 1: Spanish and French bond auctions.
--Wednesday, Dec. 7: Portuguese T-bill auction.
--Thursday, Dec. 8: ECB interest-rate decision, press conference.
--Monday, Dec. 12: Italian T-bill auction.
--Tuesday, Dec. 13: Spanish T-Bill auction.
--Wednesday, Dec. 14: Italian bond auction.
--Thursday, Dec. 15: Spanish bond auction.
--Friday, Dec. 16: Greek T-bill auction.
--Monday, Dec. 19: EUR1.22 billion of Greek debt falls due.
--Tuesday, Dec. 20: Spanish T-bill auction.
--Wednesday, Dec. 21: Portuguese T-bill auction.
--Thursday, Dec. 22: EUR980 million of Greek debt falls due.
--Wednesday, Dec. 28: Italian T-bill, zero-coupon bond auction.
--Thursday, Dec. 29: EUR5.23 billion of Greek debt falls due. Italian bond auction.
--Friday, Dec. 30: EUR750 million of Greek debt falls due.

Also in the first half of 2012, Italy needs to refinance another €400 Billion
Those who say it cannot be done should not interrupt those who are doing it
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