EurAnalysis

To be honest I'm not expecting it to break the highs at 1.37xx. I think Draghi put enough of a damper on this turd to keep the bulls a bit scared to drive it higher. As I mentioned that day, I am expecting some ranging and a nice setup for a long overdue distribution phase.

There will probably be a failed attempt to retest 1.37 at some point, but that's the end of the line I think. As always, time will tell.

ADD: By the way... It won't be a Euro rout that takes this down but more so a bullish USD.

ZH:

unless the ECB formally denies this Bild report, it is safe to say that for Draghi 1.3500 is the key resistance level, above which GETCO's FX algos will have to find other USD carry pairs to fund their market levitation.

I just love the way ZH adds drama to every sentence.

I am also thinking that we will touch 1.37 again. Just not sure what the hesitation to go higher is... Seems price is stalling.

Thanks for your input PT!

Euro-phoria is dead. It's just vultures and algos left.

Amen. The sarcasm is entertaining.

I think there was actually more reaction to this which came out 6 minutes later on talking-forex .....ECB worried EUR strength will hurt recovery in crisis statesk

PS now to see if the US traders are using it to buy in front of their Retail Sales data

Yes you're right... It was Draghi, but at the time Schauble's comments were all I had to go by.

So, thanks to you also Mr Dragueen

PT, this always happens when you place your 1000 lot size order....
WELCOME BACK!
-

HaHa Come on now. I never place orders that large. It was only 100 lots

Yup - but I didnt get that nice short that you got as I was outside taking a break before the US session.....great entry

BTW, I've switched to EurJpy for my intra-day trading - with its ADR more than 100 pips greater than € it offers more bang for my buck.

PS and I did get a sell, but a bit late....

Hello 100pips,
my price often refers to the Euro FX currency futures and not EUR/USD (there is a small difference as you know).
No I don't look at bar closures but only at levels. Because program trading, market makers and professional do look at level as well, imho

Ahh that's right I forgot you trade futures and not spot. Well the recent sell off pushed us further down so it seems as though Bears are still in control...

3 Indicators to Follow as Political Drama Returns to Europe

Last week, political drama returned to Europe, and resulted in most major European markets finishing the week solidly negative.

First, Spain's political opposition leader called for Prime Minister Rajoy's resignation after a slush fund scandal erupted. Popular Party political officials, including Rajoy himself, appear in a handwritten ledger as having received payments from contributions that violated regulations. Rajoy and others mentioned in the journal have maintained the document is a fraud. But concerns linger nonetheless.

In Italy, former Italian Prime Minister Silvio Berlusconi's political coalition gained on favorite Pier Luigi Bersani's center-left Democratic Party. This is worrisome for the markets because in the fall of 2011, then Prime Minister Berlusconi was removed from office after a no-confidence vote as Italy teetered on the brink of needing a bailout.

The economic and financial reforms that have helped bring Italy back from the brink since then were all implemented after Berlusconi was removed as PM. And the concern is that if he is elected, he will backtrack on the progress Italy has made.

Why This Is Important ...

As of now, it looks like Rajoy is safe and Bersani should win. But, as we saw with Greek elections last year, anything is possible. Making things even more uncertain, last Friday was the last day official Italian polls could be published before the February 24th election.

All this is important because Spain's and Italy's leaders must continue to implement needed austerity and reforms to assure the rest of Europe remains willing to bail them out if needed. If leadership changes and new leaders decide they don't like austerity, which is basically Berlusconi's platform, a full-scale euro breakup is back on the table, and risk assets will drop.

Trying to decipher the dozens of headlines that have come since these two political dramas erupted is next to impossible. Luckily, we know that markets have a great way of instantly discounting and valuing lots of information.

So the most important thing you must know is ...

Which indicators will help you determine if Europe is really deteriorating again, or if this is all just a "tempest in a teapot"

The three key indicators I suggest you watch over the next 2-3 weeks are:

The yields on Spanish 10-year bonds,
The yields on Italian 10-year bonds, and ...
The European banking index (SX7P), which has foreshadowed a decline in stocks over the past several years.

These three indicators have been the pulse of the European crisis since its outbreak nearly three years ago. And they often signal when things are seriously deteriorating, well ahead of a fall in stocks.

So, if Spanish and Italian bond yields continue to creep towards 6 percent and 5 percent respectively (currently around 5.5 percent and 4.6 percent), that is a sign things are getting stressed in Europe.

Additionally, if the SX7P — shown in the chart below — declines sharply, you can expect stocks to fall.

http://images.moneyandmarkets.com/2651/chart1s.gif

You don't need to accurately decipher and interpret every piece of news coming from Europe. But it is essential that you know which indicators to follow to give you a true gauge of the markets. So I encourage you to watch these three over the coming weeks, and ignore the hysterical media headlines.

They will cut through the noise and give you the real analysis of the state of European markets, which could lead you to profitable opportunities on the downside as well as the upside.

Best,
Tom

Thanks 100PipsADay great post.

You're welcome JD!

Bears are in control only on the 15min timeframe. On the 4-hour and daily chart (and weekly chart) bulls are in control. The latest confirmation came from price moving above 1.3510. That's what we needed to push bears away from the daily chart.
To go higher we need bulls on the larger timeframes. The fact that we move lower does not mean that bears are in control. As soon as bulls will regain control on the 15min timeframe the move up will resume. Even if bears take over bulls on the 4-hour timeframe we still have bulls in control on the daily.... So I think we can relax...
The fact that bears on the smaller timeframe push price lower is doing the game of the bulls on the larger timeframe...

But price and time will tell...

Cheers

Long E/U spot at 1.3432 on confluence of daily pivot support, 200sma and falling trend line support which was broken resistance yesterday. Also confirmed by a small spread high volume candle.

Target open. SL manual but around 20 pips.

E/U M15:

Come on you pig... show me how high you can fly... or did Draghi finally clip your wings?

I think Draghi gave E a trim...

And

 

1. Mkt talk German SPD may block direct bank recapitalization via ESM
2. Nothing confirmed but rumor is enough to spook recent bulls
3. Stops tripped through 1.3460 & 1.3440/50 bids filled
4. 21 DMA (1.3436) aids to stem the slide but bounces shallow
5. Next support 1.3410/20, through there likely sees slide accelerate