EurAnalysis

Here's the 5M chart. Might add to my short if red shoulder line fails.

My poor cat! I'm sure he's tired of running around by now!

LOL! Now let's move to the knees and toes of the formation!

Hey guys been a while..... Hope everyone is well?

The retracement to 1.34XX made on the daily chart being also the 50% Fib level made it an almost perfect short entry. I have 2 short positions thus far from 1.3450 and 1.3250. Daily chart suggest 1.2950/1.29 maybe within sights for this week, lets see, if we do i will most likely take 2/3 profit from my positions. I also think then we will have a bounce back to 1.3150/1.32 which will then give the Euro the strength needed to then come back and break 1.2950 and head to 1.27 my take profit target I will not be adding on to my current shorts for now but rather prefer to wait an if reach to 1.3150-1.32 region ( the bounce i expect to come) and short again, but only with a FS on the hourly chart. Daily support has already been tested at 1.3025 so could be we may bounce back up now. Only a break above 1.33 i will close all my short positions.


Input needed pls...
I wanted to ask for some insight on correlation.... It used to be that if stocks were to go higher in price than more than likely Euro would also follow suit. I have realized a sudden change in correlation with stocks and FX markets. Even though stocks are pushing higher and higher Dollar seems to be getting stronger and stronger. I am a pure technical trader but albeit study and make use of market psychology within my trading decisions. Am i wrong of thinking there was such a correlation with stocks and USD? If anyone can give me some links on thins or their own insight into this would be very much appreciated.

Thanks and Happy Trading to all

To NY open and futures showing a risk off day. Crude holding 106.20 and moving up, Gold down and steady right now, 80.850 resistance on USDX with support at 80.600.

If disconnect continues from yesterday, we might see a reversal in Euro if DOW starts to fall.

No bro actually couple of them are my x-gf friends so dont have there number but if you want I will get it

Euro / DOW still seems disconnected. DOW above 13200 and Euro moving down with 1.3054 as resistance right now.

Hi,

I aint much into correlation and money flow, and am pretty sure once PT or Kno read you post, they will give you better answer than me.

Imo markets were correlated for a long time. When stocks rallied, USD got weaker and thus our pair went up. Problem is (what PT pointed out like 5 months ago), that EUR is slowly decoupling from other risk assets. Even when markets look a bit more healthy, noone wants to hold EUR anyway.

My personal opinion is, that stocks rally because of US elections. It is kinda mumbo jumbo, but I think Obama needs stock market to look healthy and his bros at FED and GS are the ones who is buing right now. Anyway, although rally in stock markets is supposed to weaken USD, people all across the world are selling EUR at the same time. And therefore, we are stuck in a range.

T

Will 1.3030 fail as we roll into London's close? More often than now we see a reserval of price action between 10:15 EST and 11:00 EST as London gets ready to close.

Profit taking

Indeed. Usually good for 20 to 30 pips.

And there it was. 30 points and reversal.

One would think that knowing this behavior one would take advantage of it. But alas, that's not me yet. I know the behavior but still too much of a noob in Forex to take advantage of it.

Of course, this only exposes my own doubt in this theory!

On the StockTwits feed. They're all over the place!

http://stocktwits.com/symbol/EURUSD

scalped short from 1.3061 out @1.3031
quick 30+

Resistance as Daily S1 line at 1.3022 (which we've already touched)

careful with contra trades. Euro is now only as good as Gyro

Now you're making me hungry! I've not had Gyros in a long time! LOL!

Here's the simple answer:

US economy is doing well
EZ economy is faltering

Capital is flowing to US
Capital is flowing out of EZ

Liquidity is not always capital and in this case EZ liquidity is debt

Here's the rational behind it all:

In the past, in a risk-on environment, all risk assets rallied. Risk assets included securities and commodities outside of the US where yield was higher due to rate differentials. Not only did investors get better returns from non-US investments due to growth of emerging markets, but they also made a return on the interest rate differential. (Also known as carry trade)
Example. Borrow $100,000, convert them to €75,000 and invest them in a European company. Investment produces a return while at the same time the value of the dollar goes down because american capital (USD) is seeking higher yields outside the US (EUR). so EUR is being bought by USD.
Now let's say you break even on your €75,000 investment. You wipe the sweat off your brow and then you go to convert your €75000 back to USD to bring it back home. But now the USD is worth less than it was, so instead of getting $100,000 for your €75,000, you get $105,000. Hey that's a 5% return on your money that didn't even make a profit. Cool.

Now the tables have turned.

1. Businesses in Europe are losing money
2. Businesses in America are making money
3. There is effectively no rate differential any more between US and EZ
4. The general market sentiment is to sell EUR on rallies
5. The ECB is expected to cut rates further
6. The ECB has provided 3 year LTROs at a ridiculously low rate and flooded the markets with borrowed liquidity (much like what the Fed did with QE1 and QE2)
7. This is election year in US and the Fed is not about to devalue the US any more than it has to because Bernanke may be out of a job after the elections if he continues.
8. and the list goes on and on

Point is, capital cannot flow one way only. Things change like the tide and flow the other way at some point. Everything in life is cyclical and this also applies to finance. What goes up, must come down and vice versa.