EurAnalysis

Possibly Toasted?

I just started plotting EW on my chart and this is what I came up with. I'm still unsure about its validity because I didn't backtrack the EW to come up with a start point. I used 1.20xx as the start of Impulsive wave 1, which either has just completed or Impulsive wave 1 of Impulsive wave 1 has just been completed (which means at the end of wave 5, this whole thing is one big Impulsive wave 1).

Could someone correct me if I'm wrong?

Does EW stuff actually work? Seems very subjective.... Of course I could be wrong. Ive never studied it before...

Neither have I.. I'm just a new trader exploring new ways to trade. But if it does work, I'll let you know

You might want to check with member named "Luis Carlos" as he seems to trade mainly using EW. I believe his target is down to 1.27 then up to 1.34 as of yesterday's analysis.

Maybe you might want to PM him and get his input on your EW analysis...

PipTrapper!

Good morning & Happy Friday to all.

Yes that's right, it's Friday, but it's not just any Friday... It's NFP Friday. On top of that we are also awaiting the BOJ press conference where we are set to find out if there will be any additional easing from the BOJ.

As I have always mentioned in the past, on NFP Friday, the best trade to take if you insist on trading the event, is the USD/JPY pair. Buy on a better number, and sell on a worse number. However, today may be a bit different depending on the BOJ monetary policy decision. So just keep in mind that there will be other factors effecting the JPY crosses today which could extend into and beyond the NFP release time.

Okay back to focus on the Euro, because after all, that is what this outlook is supposed to be about. The ECB president Mario Draghi yesterday delivered a very pro Euro speech with his usual "The Euro is irreversible" chanting and further assured the market that the OMT program is "The" backstop for the Euro area. Designed to be the technical repair tool for the broken monetary policy transmission vehicle, it is being touted as a lot more than that. In fact it is being presented as more of a bailout tool rather than what it is... a technical tool with a hit and run effect. Regardless, whatever it actually is, the market is buying it because all the market needs nowadays is any little excuse to move their capital from a zero return safe haven (thanks in most part to global QE) into investment vehicles that offer some return, even at the risk of losing it. This is clearly unsustainable because the debt crisis in Europe is not just a matter of confidence over numbers. Rather it is a serious structural problem that only the politicians can fix, and so far they have shown a reluctance to go against the will of the people who at the end of the day do not want to give up any of their sovereignty... and who could blame them when Brussels is mostly run by a bunch of unelected puppets. In short, the haves do not want to give to the have nots and the have-nots do not want to be dictated to by the haves. This situation is not likely to change in the near term. As such, more Euro weakness is in the cards for the coming weeks and months as reality starts to set in and the US continues to show more growth promise than the Eurozone as a whole. This will be less supportive of the Euro currency as the US Dollar becomes more attractive for many reasons other than just as a safe haven.

Today will not change my outlook. However, in the short term, we're either going to see a risk-on sentiment (Euro positive) or a risk-off sentiment (Euro negative) upon the release of the official NFP report. This sentiment will likely continue into the end of the day. So how do we trade the NFP on the E/U pair? Simply put, unless the number is much worse or much better than expected, I wouldn't touch it. A number of under +100K jobs created, will likely see the USD receiving massive risk-off safe haven flows pushing the pair lower and back down towards the 1.2800 support zone. A number of over +100K jobs up to and including around +150K jobs will be quite bullish and send this pair initially soaring towards the low to mid 1.31xx zone. However, a number is excess of +150K jobs will probably be E/U bullish initially, but will also reduce the chances of further Fed easing in the future and the market may decide to reverse its negative outlook of the USD as a result. Another important number to watch is the unemployment rate which would give an indication of whether the worker participation rate has increased or decreased. 100K to 150K is what is required to maintain the unemployment rate at the current level of 8.1%. So assuming the number comes in the 100-150 range, a drop in the unemployment rate would mean that more workers have been discouraged from seeking employment, whilst an increase in the rate would signal that more people have entered the work force. Therefore, still assuming a headline number between 100K and 150K, a slight increase in the unemployment rate would actually be risk positive and a decrease would be risk-negative.

From a technical perspective in the short term, it's a very hard one to call. All time frames are seriously overbought after yesterday's rally, but that does not rule out further gains. However, any further gains are expected to be well capped far below the 1.3200 handle. Initial resistance comes in at 1.3060, followed by 1.3120 and finally the 1.3170 high. On the downside we have the previously well held resistance turned support at 1.2950/60 area, followed by 1.2875 and 1.2800/10

No matter what happens today, my mid and long term outlook for a bearish Euro still stands and I also expect to see the USD return to a very bullish recovery in the coming weeks and months as the US leads Europe and Asia in any economic recovery we may see going forward.

So, best of luck today and trade safe.

Pete Jackson's Order Board:

EUR/USD: Tech res 1.3025/30 (1.3029- 61.8% fibo 1.3169-1.2802), offers above at 1.3040/50 likely buy stops above ahead of tech resistance up at 1.3085 (Sep 19 high). Bids 1.2980/00 sell stops below ahead of more bids 1.2950/60

Today's Euro FX Option Expiries @ 14:00 GMT:

EUR/USD: 1.2900, 1.2950, 1.2975, 1.3000, 1.3020, 1.3050, 1.3100

E/U H4:

Today might be a very important POLITICAL day. Here is some thoughts on that as we await NFP at 8:30 AM EST.

http://www.zerohedge.com/news/2012-1...payroll-report

Snippet:

Steve Englander, Citi:

Tomorrow’s payrolls may be the most important economic release until the election. It seems very possible to us that the focus will be on the UR because of its political importance, rather than NFP, despite its economic importance. Many analysts feel that a Republican Presidential victory will be better for the asset markets, at least in the short term. There is some room for debate on this, but it is probably the consensus working assumption.


Our conclusion is that the UR may be a more important driver of FX market reactions on Friday than payrolls, and that the most risk positive/USD negative outcome is a run-up in the unemployment rate, accompanied by a strong payrolls print, essentially the opposite of last month’s release.


There is one more release on Nov 2, but tomorrow’s may set the tone of the next month of campaigning and be the more important.


Citi’s NFP forecast is very close to that of the market, Citi 110k, consensus 115k. Of 92 forecasts reported on Bloomberg, 87 are in the 85k -145k range, which is a very tight range by historical standards (and no indication that there is less uncertainty about the outcome.)


One unusual uncertainty is how the election cycle will affect the reaction to payrolls. A run-up in the unemployment rate will be negatives for President Obama’s re-election chances, since the UR gets the most political attention.


It is very likely that a weak print tomorrow will be less negative for risk than it would be in December, because of the election factor. Unlike last month, immediate Fed policy is not in play so it seems likely that, absent the political cycle, market reaction to a payrolls surprises would be in the cigar is just a cigar category – a strong outcome is risk positive and USD negative and a weak outcome is risk negative and USD positive, (Some would question this risk-on/USD-off correlation but it has been broadly in place since 2008 and more recently since May of this year, as the chart at the top clearly indicates).


The question is whether the degree to which political factors would offset the negatives typically associated with economic slowing. Since the indications are that an Obama victory is still the more likely outcome, despite last night’s debate and subsequent narrowing in some election indicators, the bigger FX market reaction may be to bad numbers that are seen as further evening out the odds between Obama and Romney, rather than a strong outcome that restores the skew in Obama’s favor.


NFP Estimates
http://www.zerohedge.com/sites/defau...04_corr1_0.png

UR Estimates (prior 8.1%)
http://www.zerohedge.com/sites/defau...04_corr2_0.png

So we could be in a situation where the USD reactions from most USD negative (i.e. most risk-on) to most USD positive (most risk-off) are:

1. Payrolls above 150k and the UR rising.
2. Payrolls between 100k and 150k and the UR rising
3. Payrolls below 100k and the UR rising
4. Payrolls above 150k and the UR falling
5. Payrolls between 100k and 150k and the UR falling
6. Payrolls below 100k and the UR falling

http://www.zerohedge.com/news/2012-1...gerous-leaders

Snippet:



While the discussions between these two legends varied from Phat Phong nightlife to Dow 30,000, and from China bullishness to AAPL bearishness, it was the conversation about the actions of Bernanke, and more importantly our political leaders that summed up perfectly the dreadful reality in which we find ourselves. The punchline: "It is very dangerous to have ignorant people believing that they know something."

Rogers is bullish China long-term but buying Chinese stocks only selectively...

Faber sees under-the-surface weakness in US equities and while central banks could print us to Dow 30,000; gold and other commodities will be astronomical by then...

Faber is bearish AAPL, believes its a bubble - but too dangerous to short...

Both are uber-bearish central-bankers and politicians...

Marc Faber: "Both candidates are clueless and completely artificial..."


Jimmy Rogers: "It's worse than clueless, because they think they know what they're doing.. and so they are dangerous! If they were just clueless and looked out the window, we wouldn't have a problem, but they think they have the solution - but their solutions are what's making the situation worse..."


Marc Faber: "That is precisely the point. It is very dangerous to have ignorant people believing that they know something!"

Summed up perfectly, we believe.


Must watch - especially to hear the CNBC anchor squirming...


http://www.zerohedge.com/news/2012-1...gerous-leaders


CurrencyMan: A Very Worthwhile Listen...

http://news.goldseek.com/GoldSeek/1349118120.php

Snippet:

Anyway, since "what goes around comes around," it will happen here, and everywhere else, too. And all for the same reasons, too: Imminent bankruptcy and utter ruination of a ridiculous, bloated, mal-invested, government-centric economy, financed by the evil Federal Reserve creating excess money and debt to finance it all.


To gauge how bad it will be in America, an article by Michael Tanner of the Cato Institute will perhaps prove instructive. He writes "The federal government runs 126 separate anti-poverty programs. Altogether, seven different Cabinet departments and six independent agencies each administer at least one anti-poverty program."


Together, these federal anti-poverty programs "cost taxpayers more than $668 billion last year," but that "if one includes state and local welfare spending, government at all levels will spend more than $952 billion this year," or, if you prefer, a whopping 6% of GDP. Yikes!


That breaks down to the dismal statistic that "combined with state and local spending, government spends $20,610 for every poor person in America - or $61,830 per poor family of three." Wow!


He continues without even a hint of the irony or the angry, screaming outrage that it deserves, and would have gotten in a scornful, screaming, spittle-spewing Mogambo Howl Of Complete Outrage (MHOCO) if I had written the article, which I did not, both because I don't have Mr. Tanner's talent writing or obvious intellect, and also because it looks like it took a lot of work, which doesn't interest me that much. At all.


In fact, I am actually repelled by the idea of work.


So, irony-less, angry-less, screaming-less and outrage-less, we are left to ourselves to calculate that this government giveaway of $61,830 per poor family of three is a Lot Of Money (LOM), especially "given that the poverty line for that family is just $18,530, we should have theoretically wiped out poverty in America many times over."


Hahaha! I laughed at the sheer, monumental incredulity of such a thing! I am dumbfounded! Hahaha!


But there are a lot of weird things in a huge federal budget that includes a deficit that is already an unbelievable $1.4 trillion, which alone is an astounding, unbelievable, incredible 9% of the entire economy of the Whole Freaking Country (WFC)! We're doomed!


And it's a deficit which will be - hold onto your hats! -- higher next year, and the year after that, and then, apparently, forever after that ! Double doomed!


If your eyes are bugging out and you think to yourself "We're freaking doomed!", then you will be happy to know that you understand the situation perfectly. This explains why your gut is twisted into a knot, and why your primitive brainstem is itself sending the loud message to buy gold, silver and oil stocks continuously (dollar-cost averaging), and with a feverish tenacity.


As their prices rise through the years, this will allow you to laugh merrily and heartily -- Hahahaha! -- as you watch in rapt fascination at the weird, unbelievable things that the government, and the Federal Reserve, will do in raw desperation and suicidal panic as the economy is destroyed by the inflation, deflation and misery caused by irresponsibly creating Too Much Money And Credit (TMMAC) on top of TMMAC on top of TMMAC of top of TMMAC.


If you do NOT buy gold, silver and oil, however, you won't have anything to laugh about.


And speaking, as I do, for all the stupid people in this world who prefer to watch TV, eat, drink, have fun, or simply stare off into space like some kind of brain-damaged mental-case rather than have to deal with boring investing stuff, we are very thankful that simply buying gold, silver and oil stocks is the smartest investment anyone can make when the money supply is being increased by so much, for so long.


That may explain why those who buy gold bullion, silver bullion and oil stocks, in a desperate, fearful response to the Federal Reserve creating so much excess money, are known to say "Whee! This investing thing is easy!"

CurrencyMan:

I can make it as simple as this. We have the Professor in charge. That was not a conspiracy. We have a Global economy. We had a POLITICAL decision by Paulson when they put Lehman into Bankruptcy. HELL was let out of the bottle and we got TARP...

It is NEVER the CRIME that is important, it is the COVER UP.

TARP was the cover up...

The FED has brought the World here and that is 100% factual.

THINK OUTSIDE OF THE BOX and you will understand this will not end good. Be prepared and you will prosper. Stay uninformed and prepare to need to JUMP off the cliff.

Even some of the 1% will join the 99% as VALUES arre destroyed as the Dow goes to 6000 and Gold goes to $3000 US...

Today just might be the beginning of the END...

The NUMBER today could be 75,000 and so it goes. The number is based on BLS and that tells it all.

http://www.bls.gov/

Be ready for ANYTHING today.


Good Trading !!!

Good odds to print 1.3150 and potential over-shot up to 1.3200~20 to start the month..
Better "Buy On Dips" odds vs "Sell On Blips" for those looking for a figure+ payday today with hourly close risk below 1.2950.. same for scalpers looking for 20 pips with peanut stops..

Euro Open Positions snapshot:

http://www.financialsense.com/contri...risks-escalate

http://imagesize.financialsense.com/...x-sep-2012.jpg

Given the NBER co-incident composite has been declining for 7 months and the leading data seems to have made an attempt to find some support since 2 months ago, we may find the co-incident data decline further for 1 or even 2 months before bottoming out, probably flirting very closely with the recession trigger in the process. Some co-incident data has already showed signs of bottoming, as shown by our “50-State Co-incident Indicator” update note.

Despite the torrid growth of the economy, and the risks this exposes us to for external shocks, we are still of the view that the lack of corroboration of the leading indicators in signalling recession mean it more likely we will skirt it again as with the prior two summer swoons. Even if we are incorrect and the Fed easing continues to prop up the leading indicators whilst we fall into a balance sheet recession due to a fall in final-demand - it is likely that the average 30% correction of the stock market in the wake of recession may not materialize (or be far less severe) and that the recession is a “muddle through recession” just as the “muddle through” expansion that went before it.



http://www.financialsense.com/sites/...since-1959.jpg
Source: RecessionAlert

Agreed. It will be a tough slug to go down right now. However, a quick pop upwards may clear the weak shorts and make room for a bearish resumption. Also keep in mind that the crowd psychology works both ways. All it will take is a heavy push downwards on safe haven flows to flip the crowd sentiment to bullish and then the top will be overcrowded... not the bottom.

Curious too what the highly knowledgeable has to offer in his own words

that scenario happened during the week of 07222012..
a quick spike post NFP up to the high 1.31 supply zone could do it..

from my experience:

when you sell an upward movement, you can make a profit because you can take a retracement of that move. the problem is you're not focused on the main motion, so you do not open a long position at the end of the retracement and worse, it may happen that you do not even close your short position, because your mind is already hoping to move have reversed.
is easier and less risky and more profitable, wait for retracements to enter, but without negotiating them, focusing on the main motion.

just my opinion, hope you dont be angry with me

Cat