Reflexivity in the USD

In at the higher levels at 1.0873 on EUR as it is WAY OVERBOUGHT on 1H. Also per the last post I figured if dollar did not hold 97.884 after a short burst from that level on US numbers only to have a fake out lower. It was successfully tested the 97.556-50 level I spoke about last night

ON EUR: The one thing I did not see fully was not only were people not concerned about EUR Monday's highs at that 1.0870-75 spot, they were actually eyeing to fill the gap from Friday's close at 1.0916 SMH not always can I get in a the best price. So short EUR essentially at Monday's highs and will have to wait for confirmation on NFP tomorrow.

If the EUR can hold this level and not finish at the highs during US session close and does not close on H4 above 1.0910 we could see another ABC wave lower. This is HIGHLY DEPENDENT ON DOLLAR HOLDING 97.556-50. Otherwise I would have to say DANO (see his last couple posts) is correct in his wave analysis about a larger ABC long in EUR going to 1.10.


TLDR:
-Dollar needs to hold 97.55-50 for final basing to 99.80-100.40 Otherwise if it breaks tomorrow and close below on H4 a retest of 96.55 is almost assured which would see EUR at 1.10 and change
-EUR needs to fail at this level and roll overnight to form a new ABC pattern and trade to 1.06-1.0620 Otherwise if it closes above 1.0910 we are most likely going higher
-See DANO post on a possible longer extension higher if this level does not roll lower on EUR

Phew! CME eur closed at 1.0905 just below the 1.0910 I spoke about. And dollar even though it was brutal today held the 78.6% retrace to close at 97.675 where the 78.6% sits at 97.556

Now I am not out of the woods just yet, I will allow ASIA/LONDON to do its normal thing of stop hunting but given the light volume I am hoping those moves will be minimal. It would be even more beneficial that come London time we are above US close on dollar which will be more bullish going into US NFP.

If however, we approach US session and DOLLAR is trading and bumping up against today's US SES LOW of 97.555 we could be in for another leg lower..

Today, was very odd. I knew EUR has some momentum left in H4 but the way dollar traded tells me one of two things

*NFP WILL HAVE A HUGE MISS sub 200k and dollar was acting weak the last two days due to a consensus that this could be the case. Given we are now almost at full employment at 5.5%-5.0% the great numbers in NFP may not be as spectacular as they have been the last several months. We could have prints that will vary from the low 200's to the mid 200's going forward and if we get anything SUB 200K then the dollars move lower will be obvious given new take a rate hike won't happen this year. ISM is a concern also for me but I need to wait further data on that.

*NFP WILL BE A DECENT/GREAT NUMBER We could see two maybe even three more NFP releases where we are posting 250k+ job gains that will further fuel speculation of a hike at least in September. And today's move in EUR pump was to really bid it up before a leg lower going into next week per my charts in the last post.

Either way today, is a strange day for dollar and NFP tomorrow should clear some bias out of a + 100 USD (like myself) or those who say EUR wont trade lower than the bottom it put in back in March.
Best of luck all.

ON THE US STOCK MARKET and the implications for the dollar if we have a US selloff:
http://www.forexfactory.com/showthre...32#post8129732

When I started this thread I mentioned that the thesis for this was a secular bull market of USD given a new rate cycle that will take place. I also pointed out the similarities we are experiencing when Reagan was in office and where the dollar and US stock were trading when he came into power in 1981 right when the Bull market of the dollar began. Also noting the fact that the stock market was in a tight range before it tried to perform a leg higher only to fail TWICE and trade lower for the remainder of the year to end almost uneven or down a bit. It formed a base and saw mergermania in its last push and the major speculative capital flows were coming in also taking advantage of not only MERGERMAINA but a RATE HIKE CYCLE IN A RISING STOCK MARKET.

The reason I am writing this again and showing this again from the original drawings I posted on the 1st page back in March 11th is simple: WE ARE ABOUT 92% CORRELATED WITH THE BELOW PIC AT THE MOMENT. What this means is if we have a positive NFP tomorrow the STOCK MARKET WILL FALL A LARGE AMOUNT OVER THE NEXT COUPLE WEEKS. I did a mock up of ABC retrace on a longer time cycle and we are likely to trade to 2020-1980 on the S&P EMINI in the next month or two in which I will be a heavy put buyer.

Also very telling that people need to look at is IYT that I also included in the images below. For those not familiar it is the TRANSPORTATION average which is a very great barometer of the health of the commerce and trade of our economy. WE ARE TECHNICALLY BROKEN DOWN AT THESE LEVELS. Today we closed below major support that has been set in DEC 2014.

So how to play this: Here are a few things that can happen if we do have a US stock market selloff down to the levels shown below:
* Dollar is usually king in times of uncertainty, when people don't know what's going from a money management standpoint or want to lock in profits and sit on the sidelines they go into BONDS OR MONEY MARKETS. This bodes well for the dollar

* If the NFP print is better than expected the correlation that took place in 1980 could hold further causing an inverse correlation between US stocks and dollar where each will trade in opposite directions for a short term before equities find a base.

*If however Dollar decides to trade lower with the stock market this will be interesting to see where the money will shift to in the next month or so, it could just be fixed income or maybe even CHF or JPY as the main drivers.

Now of course if NFP is WORSE than expected we can assume that the stock market will actually trade UP tomorrow. Given the fed will still be accomidative to the market with excessively low interest rates for at least until the end of this year where they will reassess.

If we do have a stock market sell off my targets are 2020-1980 with the dollar trading upwards while the stock market is selling off. Divergence needs to take place tomorrow and at least another week to really have this correlation play out that took place many many years ago.

Well, I was right it was going to be one of the two unfortunately I was on the wrong side That is going to take me at least a month to make up the loss in EUR. Also lightened my position to pre Monday's size on dollar. I wish the stock market was open today so I can load up on spy puts this market is going to roll over to 2000-1980. It should of traded higher but yet did not. We are in for a larger correction.

Not going to do anything today, just going to lick my wounds and come back refreshed next week. As I mentioned in earlier thread if we have a miss see Pedro and Dano's post the last few days their wave abc is now likely to fully play out higher for EUR/USD

My thoughts today on Dollar. I expected it to trade to the main support given the horrible NFP and it held up nicely so far. This does not mean that I am a renewed dollar bull to increase position size and will wait for it to break above 61.8 or wait for EUR to break below 6.18 from its recent wave up set last week. If the EUR holds this level we are going higher and I will have to just go long eur to offset current long in DX.

Anyway this is not the SELLOFF IN EUR that everyone expects even thought 1.10 held up. We need at least a break below the levels outlined below or continuation in US session for me to be a believer. From what I can see until this breaks this is a new ABC wave possibly taking place in EUR for a move higher but I will wait.

The moves last night in EUR could go one or two ways.
A) this is an ABC pattern which would be a continuation higher which is similar to the downward ABC pattern I and several others in EUR/USD called a few weeks ago.
(http://www.forexfactory.com/showthre...42#post8174742)

B) We break the upward trendline set in EUR and move to test old lows.

Either way I have to agree with another trader on here when we were talking in stating that the easy money has been made in shorting eur or longing dollar for the time being. I say this for the following reasons.

* We have had several months where EUR would be down on a daily basis by large percentages and vice versa on dollar. Volatility metrics in forwards have come down which signals indecision and waiting for a new catalyst

* COT and other metrics show EUR shorts are at new records while the EUR has been trading up for the last couple weeks.'

* We are starting to hear crazy stories where CNBC reported for example some trader bot IN A BLOCK TRADE MIND YOU (wont' touch how dumb that was lol) 40MM put spread for Jan expiration in FXE on 3/11. The reason I point this out is we are starting to hear stories more and more of non professionals trying their hand at playing currencies. I spoke to a friend of mine who is a financial advisor and he mentioned to me instead of allocating a portion of the client funds to money markets he is looking to purchase UUP and other basket of currency ETF's to get better return. I was like yes good luck with that and you will be hearing from your clients soon when the strategy does not work out as you anticipate

*Greece has the IMF loan repayment due in two days which they promised to pay but don't be confident until that wire shows up . But they have additional hurdles at the end of this month where the road could get bumpy and the fact that Greece is asking for WWII reparations just goes to show you how ludicrous this mess is getting.

I am not saying that EUR has bottomed here or dollar has topped. After all my thread is about a major cycle dollar could be in. What I am saying is those looking to ride these macro moves better have some other positions working for them in the meantime because the EASY MONEY HAS BEEN MADE. We could very well be in a new consolidation zone in Dollar like earlier this year that lasted 3 months and with every 30-60 tick move in EUR or Dollar people will come out and SAY BOOM THIS IS IT WE ARE GOING LOWER/HIGHER only to have that pair move in the opposite direction the other day.

I am waiting for a break of this EUR trend to go lower or the completion of an ABC for eur to go higher in order to offset dollar longs. Otherwise don't be a crack head and feel you need a fix by pressing the buy/sell all the time when it's not optimal. Wait for the setups to occur, get confirmation, then FOR GOD SAKES MOVE YOUR SL TO BE OR AT MIN YOU 1ST TP LEVEL. The longer you sit on dead money with a losing trade or better yet a sideways trade is missed opportunity to have it work for you and accumulate % in other pairs or asset classes.

TLDR: Don't be a rocket scientist, take what the market gives your and move on.

[quote=jplazard;8189954]The moves last night in EUR could go one or two ways. A) this is an ABC pattern which would be a continuation higher which is similar to the downward ABC pattern I and several others in EUR/USD called a few weeks ago. (http://www.forexfactory.com/showthre...42#post8174742) B) We break the upward trendline set in EUR and move to test old lows.

We have break the ABC PATTERN, We have stopped at the ascending line from eur/usd about 1,08 and we have broken the descending hourly trend line. What are your thoughts???

I have realized that 1,08 is where the market started the last uptrend wave with a wiping stop-loss with US unemployment claims on April 2nd..

It did break that 618 but has held up on the trend line thus far as you obv know. EUR is oversold on 1H and a bit on H4 I suspect if fed comes out tomorrow and talks about a moderate pace or slow down this will punish the dollar that much further for a sept hike, and EUR will continue higher to retest 1.10. I am long EUR a few contracts and just barely came back to BE at 1.848 but it is a hedge to offset discouraging Fed news and a possible continuation selloff in dollar.

EUR looks to be oversold at this point so I am looking for a bounce this week or the next few days. Took a long a few hours ago based on it hitting a key fib completion point on EURfut for a move up to 1.0650 min. Other than that happy with the dollars PA this last week but it should find some resistance in the next day or two given its huge surge last week alone.
June/July is out of the question so far based on Fed funds for a rate hike unless econ data really changes, traders are pricing in at min the first hike to take place in Sept. We will see what econ data brings but for now just going purely off of Fibs, RSI and EUR is oversold on H4 and looks to bounce back here.

Because of the recent loss in EUR i took this week I will just focus on taking 30-60 ticks here and there to neutralize the loss. It should be interesting since I have not swing traded in a very long time. Only position traded so previous open, hi, low, close levels will be key for me to find entry and exit points on a daily basis.

GL

The potential reflexivity reason for dollar strength is this, in my opinion:

Dollar strength on monetary divergence, leads to weaker earnings for us companies, which could lead to a recession, causing a flight to safety making dollar stronger still.

That is a great view and I agree with this notion. And if we do have a crash or at minimum a mild rescission people usually by treasuries which means they have to buy dollars first in the transaction.

Out at 1.0671 was close to getting stopped out overnight but that key fib held up. Looking to get long again on EUR but my goal this week is to not position trade EUR but to just peel off 30-70 ticks while increasing contract sizing.

Good start of the week as my short term long bia in eurand cool off period in Dollar is playing out at the moment.

LOOKING TO GET LONG AGAIN IN EUR if the dollar fails at the following levels.
I was right in the direction in dollar set up on APRIL 2nd but failed to follow my own advice and took a bad trade in EUR.
http://www.forexfactory.com/attachme...2&d=1427993321

Now that the minor ABCD pattern have been achieved in dollar ^ I am looking for dollar to 'crack' lower the B wave to trade down to 97.90-97.30. It needs to do the following to meet this short target.

1. Yesterday's low in dollar can't hold during US session tomorrow
2. It needs to have a strong 4hr close below the main B wave (purple) at 98.95 for a move lower to the levels mentioned above.

Took a small short on Dollar just now at 99.14 for a move lower tomorrow. wil also go long heavily for a swing trade on EUR fut if dollar breaks this level on a 4hr close. Otherwise the trade is invalid if US dollar holds yesterdays low range going into US session which is unlikely right now.

I understand the fundamentals are getting more dire for EUR given a 24th meeting with IMF/EU/Greece to find out or not if they will default, but based on this known information why has the EUR not traded lower since US open?

Could it be retail sales were a disappointment thus pinning another NO HIKE for JUNE/JULY
And, at first if people believe Greece will exit this will boost focus on the stronger peripherals just like a company that divest an unprofitable business line. Now we could have a liquidity event in the future after a possible Greece exit causing further depreciation, but the NOW mentality might be thinking a greece exit is a great thing and long overdue!!!

Either way I trade price action and right now Dollar looks like it will have another wave lower tomorrow. but a stop loss at 100 with the possible move to 97.90-30 is a grat R:r for the smaller size i am swinging this week

Bot 2c at 1.0616 on Eurfut.
Dollar failed to follow through yesterdays low of 99.505 after violating it on H1. Also If you notice the H1 bar it was completely absorbed which is a reversal candlestick setup. Feel comfortable being short USD and long EUR futures at current levels for EUR/USD to move higher in US session.

Closed out of my long 2contracts in EUR at 1.0650. I was hoping it could of stayed in yesterdays US session range (yellow lines) but as soon as it crossed into yesterday;s range moved me TP to just below yesterdays US low. And sure enough if failed to hold. Nice move from 1.0616 to 1.0650 . If I was position trading I would of let that move happen AND COME ALL TEH WAY BACK DOWN TO BE or LOSS as its trading at 1.0608 but still swing trading this week taking 30-70 ticks on more contract.

So flat on EUR with a nice profit
Still holding on to the Dollar shorts as Its hinging on that crucial support (purple) That hourly reversal candle I spoke about in London trade was the top for the session and I wished I waited to short there knowing it would test yesterdays US session low price before deciding but can't have it be perfect all the time in trading. Either way still short USD waiting for the next leg. Will get long EUR once more if we break that support on dollar but I suspect with the move already happening in EUR and Europe markets closing in a bit here it seems unlikely right now.

B wave broken on Dollar the move to 97.90-30 per my post yesterday is now assured. Eur still looks to be strong until dollar bounces off 61.8-78.6 at lower levels.

I have just seen several post where people are like "there was a leak" or someone knows sommthing thats why they caused the spike and i SMH!!

People need to understand that when these spikes happen down in dollar or EUR over the last hour it's not that someone pressed the wrong button, or that there is inside information and someone is front running ITS ALL TECHNICAL.

I like millions of other traders know that the B wave line of 98.90 was KEY as I have mentioned several times before over the last 24hours and this is where not only major sell stops are at but also where new positions are getting established. Look at 4hr chart below of dollar: If you notice that major Bwave support area (purple line) held the dollar up over 24 hours!! as soon as it broke last hour OF COURSE YOU'RE GOING TO SEE HEAVY SELLING which causes EUR to spike

Also on EUR when it did not sell off when Draghi came out should of been an oh shit! moment for shorts given when he opens his mouth recently it pounds the EUR down further. Vol is minimal in EUR compared to the opening months this year. Expect sideways action until at minimum the week of the 24th when they decide on default or not.

For new traders when you see crap like 'someone knows something' or 'someone punched in a larger order than instructed' usually that trader is on the opposite side and does not look at PA in it's truest form. Technical framework and proper money management is all you need in this game.

http://www.forexfactory.com/attachme...6&d=1429119304
Out of dollar short for a nice profit as Dollar is holding yesterday US session low. Don't try to buy EUR just yet let dollar come back up a bit here in the next several hours.

Great swing trading this week. I miss this being a position trader waiting for LONGERRRRRRRRRR moves


Now flat across the board