Thread: EUR/USD Trading Room

Most of my analysis shows a the dollar making substantial gains against the Euro. Which, in the dollar rack stage, does not make any sense. But since there are two sides to the pair, as Halifax pointed out, the euro is fairly fragile too. There's also quite a big player betting that the euro markets will probably crash.

http://www.financialnews-us.com/?pag...tid=2448565379

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Originally Posted by ;

The majority of my analysis indies that a dollar making substantial profits against the Euro. Which, in the dollar stand point, doesn't make any sense. However, given that there are just two sides to the pair, as Halifax pointed out, the euro is somewhat fragile as well. There's also quite a big player gambling the euro markets will probably crash.

Http://www.financialnews-us.com/?pag...tid=2448565379

Nice article. No doubt many will view that post. When you have a look at the daily EUR/JPY chart, you'll see that EUR/USD discovered support on Friday at the prior peak of this mid June to Mid July uptrend. From a fundamental perspective I would say a 25 basis point decrease together with a dovish announcement could proceed the pair involving 1.42 due to this rate differentails and equity wind, but since I am really beginning to think in the likelihood of a recession occuring in a few months time, the concurrent equity unwind will induce the pair considerably lower-perhaps into where it started 2007 (1.30 area)
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Originally Posted by ;

the concurrent equity loosen will induce the pair much lower-perhaps to where it began 2007 (1.30 place)

EXACTLY! I've been saying for the last year the equity markets operate up was a precursor to recession or perhaps a depression given that everything in the united states is debt pushed and it was only a matter of time until there are a credit crunch together with the main driving force being the subprime loans.

Really, my top indior was the auto industry the past couple of decades. All of those suv's on zero down zero percent funding from the major manufacturers was a recipe for astrophe given insecurity at the middle east and increasing gas prices. Couple that with the FED increasing rates, cheap financing would shortly develop into a ghost and other increasing costs including food and gas . .which are not contained in the official formula for determining a recession, go figure... and there might come a time when disposable earnings would diminish and the expense of updating to a newer suv would be prohibitive. This came to fruition and GM and Ford stock nose dived and their bonds were down graded to junk status.

So is it any wonder that the same has happened in the real estate and lending markets?

Not only that, the baby boomers are coming up to retirement and that I bet they'll be protecting their retirement resources which means pulling from the equity markets if there are indiions of a major correction.

Or perhaps attempting to cash in on their home equity. The real estate lending scenario is really dicey as well as those with excellent credit are having a hard time getting financing. The money is just not there. In fact, the FED pumped a couple billion to the charge providers in order to provide some liquidity so that the creditors would have some thing to give. All at a cost of course. I really like it how the FED generates paper money and gets paid back in hard money only to give it back to us at interest telling us that they're bailing us out. FUBAR cycle if there ever was one.

Okay, way off topic today. sorry 'bout that. Attached below is a weekly chart showing a Gann grid adjusted to squaring a range of time going back to Oct 2002. The closing of this past week set price right about the 360° of time plus 495° of price. I would be expecting a fairly considerable correction from this stage pretty close to your own 1.30 area. I've got 1.8280 discounted as the first goal. The cycles of time are fairly accurate and I've circled in yellow where price turned. At least within a few bars. 6/8 ain't too bad and if price turns within the next few weeks it's going to be 7/8 right.

The reddish ma looking thing is that a price cycle forecast showing this past week as a major turning point. This price cycle reveals one inversion,but the turning points were right even though leadership wasn't. The next turn is not unitl the end of January. There's a bump near the end of November beginning of December. Again, inversions occur and I am not sure how predict them, but the primary key is the forecast change of leadership and not necessarilly literal leadership.
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2 Attachment(s) I thought I would discuss some Euro analysis whilst debating whether to remove this 1kt thing.

Looking at the weekly (first chart), we seem to be in a rising wedge and approaching the upper resistance line. This looks like a wonderful reversal point and ought to hit someplace around 1.3980. If this proceed and break the underside support line (under 1.3500) and breaking up the wedge, then there's potential for this to come back to base - becoming the 1.1600 region. This is a long-term analysis that may evolve over some years.

Coming closer to home on the daily (second chart), we have a potential bearish harmonic in creation (AB=CD). Again, the capacity for this pattern is many hundreds of pips to the downside (possibly to the base support line - 1.3550 area).

Therefore, a large probability short may present itself in the mid to high 1.3900 region with a stop someplace above the plogical 1.4000 area (perhaps 1.4050). I would say no less than 100 pips (back to around 1.3850) will be on the desk though I would be cautious around FOMC on Tuesday.

Z
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The pair will love if the fed lowers by 25 basis points and issues a dovish statement.

I am looking for another rally prior to a substantial bearish correction. I am looking in 1.4000-1.4050 as a shirt. There is a substantial weekly trend line up in this range.

Dave

2 Attachment(s) While I have found late Friday Techs ( lower time frames ) to be somewhat misleading....Posting these to chew on for consideration.

Potential correction on the horizon??????

My place : FLAT ( for now)

Fxj
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I believe the question of where EUR/USD will go will be found at LIBOR and in some thing you may not be accustomed to studying: 10 year German bond yields and also the 2 year to 10 year spread.

The 10 year return is the most sensitive to inflation expectations and it climbed this week. The 2 year to 10 year bond spread has increased. Whether it continues to rise or not will be determined in 3 month (and more) Euro LIBOR. If rates there stay elevated or rise further, 10 year German bond yield increases, the 2 year to 10 year spread will expand and EUR/USD will continue to appreciate. Should the Monday LIBOR adjusting show rates have decreased, expect the same to be viewed in 10 year German bond yeild. The 2 year to 10 year spread will narrow. EUR/USD will drop in that case.

ECB officials stated that inflation remains their main concern. Trichet still is calling the fast rate accomodative. When interest rates stay low, expansion is enabled and the chances of increasing inflation is present.

Originally Posted by ;

I am looking for a different rally before a substantial bearish correction. I am looking in 1.4000-1.4050 as a top. There's a substantial weekly trend lineup in that range.

Dave

The price over taken my top by roughly 70 pips. Not bad from daily/weekly chart projection. The overshot means more money. I will not close longs untill a daily sign is given. The top weekly trend line is bankrupt, and price stays above it. This puts 1.4500 with in reach. Don't be so fast to brief even about 4 hr signs. A break from the importance could lead to a further push greater by retail break out traders. The wise ones will buy on a dip, making brief signals about 4 hr probably false signs.

Holding longs from 1.3660 and waiting to get a top to be established.

Dave

A break of above mentioned annual service at 4967, and sustained trading below it opens the way to 4300 area.

The keypoint to see here will be Gold.