Good morning everyone...
Barack Hussein Obama wins the presidential election and gets four more years to try and fix what is broken in America. With the Senate still under Democrat control and the House still under Republican control, absolutely nothing has changed since before the election campaigns started. All we got was a multi-billion dollar show, but at least Americans got to have their collective say. That's democracy. Hopefully this time around we won't see a repeat of the lame duck governance we have seen in the past. It's time for both sides to get together and fix this thing. Well, at least we can hope.
So, what about Europe? Well nothing has changed there either. Greece will vote in additional austerity measures today in order to ensure they will get their next aid tranche before they run out of cash in the next two weeks. Further West, Spain will likely continue to delay the inevitable request for aid from the ESM/OMT programs. To the North, the EC will continue to delude themselves into believing that Eurozone fundamentals are stronger than those of Japan and the US. In the German city of Frankfurt, the ECB will continue chanting along that the Euro is irreversible. What more could a trader want? If nothing has drastically changed (for better or worse), then I suppose one could very well rightfully claim that the situation is stable. However, as I have been saying for a while now, this is just the calm before the storm. As long as there is political, economic and social disparity in the Eurozone, the peripheral economies will continue to falter and they will drag the core down with them.
Yesterday the markets rallied on the anticipation that Mitt Romney was going to be the next president of the United States. Then overnight when it became more apparent that Obama was going to win, the markets plunged once more and then early this morning when it was clear that Obama was the leader, the markets rallied again. Talk about a schizophrenic market. Wow!!!. I personally am not interested in how the market feels right now because it is clearly trading on emotions and not clarity. I'll give it the rest of this week before I pass judgement but I'm still very bearish on risk assets for the moment and certainly bullish USD in the mid term. The reason behind my sentiment is quite simple. In the case of a global recovery, such recovery will be led by the US which would be USD positive going forward. In the case where the economy slips back into the path of recession/depression, then the obvious trade is to buy the USD as capital flees to safe havens; the biggest of which is the US bond markets.
Technically, the EUR/USD has broken the range low of 1.2802 and had a daily close below. Since yesterday we have seen a gradual climb back up to a high of 1.2874 on broad based USD weakness in a risk-on rally. Resistance from here comes in just above at 1.2880/1.2900 area and from there I expect to see weakness in this pair as it moves to complete the Head and Shoulders pattern I identified last Friday which should target 1.2658 area on a measured move basis. Above the 1.2880/1.2900 resistance is the broken neckline of the H/S pattern which should come in around 1.2920/40 and that should provide some challenging resistance. A break and close above that signals a potential failure of the pattern and returns us to the dreaded consolidation range we have been stuck in since mid September.
I remain bearish the EUR/USD and will look to sell any and all rallies against resistance for an eventual accelerated move back down to the July lows at or near 1.2041 in the coming weeks.
As always, be well and trade safe.
Pete Jackson's Order Board:
EUR/USD: Bids 1.2830 (200 day MA 1.2827) down to 1.2800, sell stops just below ahead of bids 1.2765/75. Tech res 1.2878 ( daily cloud top) Offers 1.2880/00 (tenkan line 1.2892), buy stops above ahead of offers 1.2940/50
Today's Euro FX Option Expiries @ 15:00 GMT:
EUR/USD: 1.2750, 1.2800, 1.2850, 1.2875, 1.2900, 1.2955
E/U H4:
E/U Weekly:
Barack Hussein Obama wins the presidential election and gets four more years to try and fix what is broken in America. With the Senate still under Democrat control and the House still under Republican control, absolutely nothing has changed since before the election campaigns started. All we got was a multi-billion dollar show, but at least Americans got to have their collective say. That's democracy. Hopefully this time around we won't see a repeat of the lame duck governance we have seen in the past. It's time for both sides to get together and fix this thing. Well, at least we can hope.
So, what about Europe? Well nothing has changed there either. Greece will vote in additional austerity measures today in order to ensure they will get their next aid tranche before they run out of cash in the next two weeks. Further West, Spain will likely continue to delay the inevitable request for aid from the ESM/OMT programs. To the North, the EC will continue to delude themselves into believing that Eurozone fundamentals are stronger than those of Japan and the US. In the German city of Frankfurt, the ECB will continue chanting along that the Euro is irreversible. What more could a trader want? If nothing has drastically changed (for better or worse), then I suppose one could very well rightfully claim that the situation is stable. However, as I have been saying for a while now, this is just the calm before the storm. As long as there is political, economic and social disparity in the Eurozone, the peripheral economies will continue to falter and they will drag the core down with them.
Yesterday the markets rallied on the anticipation that Mitt Romney was going to be the next president of the United States. Then overnight when it became more apparent that Obama was going to win, the markets plunged once more and then early this morning when it was clear that Obama was the leader, the markets rallied again. Talk about a schizophrenic market. Wow!!!. I personally am not interested in how the market feels right now because it is clearly trading on emotions and not clarity. I'll give it the rest of this week before I pass judgement but I'm still very bearish on risk assets for the moment and certainly bullish USD in the mid term. The reason behind my sentiment is quite simple. In the case of a global recovery, such recovery will be led by the US which would be USD positive going forward. In the case where the economy slips back into the path of recession/depression, then the obvious trade is to buy the USD as capital flees to safe havens; the biggest of which is the US bond markets.
Technically, the EUR/USD has broken the range low of 1.2802 and had a daily close below. Since yesterday we have seen a gradual climb back up to a high of 1.2874 on broad based USD weakness in a risk-on rally. Resistance from here comes in just above at 1.2880/1.2900 area and from there I expect to see weakness in this pair as it moves to complete the Head and Shoulders pattern I identified last Friday which should target 1.2658 area on a measured move basis. Above the 1.2880/1.2900 resistance is the broken neckline of the H/S pattern which should come in around 1.2920/40 and that should provide some challenging resistance. A break and close above that signals a potential failure of the pattern and returns us to the dreaded consolidation range we have been stuck in since mid September.
I remain bearish the EUR/USD and will look to sell any and all rallies against resistance for an eventual accelerated move back down to the July lows at or near 1.2041 in the coming weeks.
As always, be well and trade safe.
Pete Jackson's Order Board:
EUR/USD: Bids 1.2830 (200 day MA 1.2827) down to 1.2800, sell stops just below ahead of bids 1.2765/75. Tech res 1.2878 ( daily cloud top) Offers 1.2880/00 (tenkan line 1.2892), buy stops above ahead of offers 1.2940/50
Today's Euro FX Option Expiries @ 15:00 GMT:
EUR/USD: 1.2750, 1.2800, 1.2850, 1.2875, 1.2900, 1.2955
E/U H4:
E/U Weekly:
Those who say it cannot be done should not interrupt those who are doing it
