There are 2 fibo levels that we may look at for the last half a year - 8 months. Both have same top at 1.29 high, but first is starting in August (gray lines) and the shorter is from November (blue - line). If we look at the blue levels, we see that the 50% was already broken at around 1.2170 and that is exactly where our trend line on previous 240 min chart started forming. If we take a look at that blue line on the previous chart, we have 3 (three) attempts to go below 1.2170/80, all of which failed and as a result we stayed in the range and formed the consolidation formation. And so, once again we see the importance of the break which we witnessed last week. Taken the fact that the market so strongly supported the 50% fibo, we may expect even stronger support coming from the next, more important 61% fibo which is at 1.1960/70 as you may see on the chart below. But on the other hand, we have the 38% retracement of fibo which is starting in August (the gray lines) standing right at 1.21 level and still protecting it. We tested the level in the beginning of the month when we saw the strong buying coming from and the market and we also retested that level 2 last days in raw (if we look at the 240 min chart, we see that there were actually 4 tests in these 2 days). Each time the market bounced off the area. Anyway, to sum up, there are indication of further move down, but for that to happen, we urgently need to break the 1.2050-1.2100 area. Afterwards its the 1.1960/70 that may provide the support, and next level I see as a target for my current open position is 1.1870. The market closed around 1.2130 and that's 30 pips below my entry on Friday. Stop loss is at entry level, so it can only close for zero result now. I don't know whether I will be reentering in case I get stopped for zero again, but I will try to post in that case. That is it for now. Keep having a great weekend! Best Wishes, Rezo Shmertz
Rezo.. u happen to have excellent analysis. We look at the chart very similarily and the key is simplicity and avoiding indicators and other nonsense. My bias too is down on the Euro. I think we can make a 100-200 pip move lower. The chart is of the euro futures because I think it does a good job of portraying the support level better. As you can see in the chart the market is kinda rounding a top on the chart... i guess similar to an inverted cup with handle. The trading play for me is that if we break the key support level... we will more than likely gun out all the stops at that level. I bet some big hedgies are gonna try try to nail those stops because its a key support area. This probably will cause the market drop atleast 30-50 pips in minutes which can be a nice short term play. The key think to look for on a break of support will be if its simply a technical break or fueled by news or fundementals. If there is no news on teh break chances are the break wont be as devestating... but if its based off key news I think we can see a 100 pip directional move. --MIKE
Couldnt agree more Mike, but sometimes, market moves strongly even without any catalisys such as global news or fundamentals. Of course such thing doesnt happen much, but ... once again, I couldnt agree more. Indications are down, and if there will be any news to support move down, it will be accelerated and 1.1960/70 should be triggered very fast. Will see. Have a great trading week Mike, everyone (including myself ) Rezo
Here are some short term fundemental catalysts that I think might hold the euro down... 1. France election mess will slow down economic reform 2. Sluggish German economy.. thats what the key eco data shows... Sinn from the IFO pressuring ECB to lower rates. I think companies like BMW and Benz will are pushing the gov. for a lower Euro to help their business. 3. Possible rate cut.. wheras in the US things seem to be stronger and key US fed officials signaling that they wont hold rates much lower.. Basically u have the EZ bitching for a rate cut.. yet u have the US signaling their rates are bottoming out. 4. Although UK not linked to EURO... their gov has stated that they are favoring a weaker cable because their exporting is lagging.. I believe this is even more so the case in Germany. Wildcard: 1. Al Qaeda terrorist attack.. will hurt dollar. Flight to gold and selling off dollar. ---- Overall I think if u just look at the fundemental picture right now the EURO should be heading lower in the short run.. However, the longer term horizon is very tricky because the US has many serious problems.. which are mainly debt and job related. --MIKE
well, it failed to break the support area and now it bounced to above my stop order at 1.2160. Trade was closed for zero result. I am not considering to reenter this trade. Good Luck everyone!
While Euro and other majors (except for JPY) are in mixed picture, Canadian is showing a very nice picture of strengthening and the move is confident enough to start seeking for an entry. I don't remember exactly if it was a week or 2 ago when we discussed this, but USDCAD was at the time retesting the 1.34 key resistance, and it was an interesting situation whether it would finally brake or not. I said that it may be the last chance to go higher, and by a chance that is indeed what happened. It failed to break and nice confident selloff followed. Now, when we broke all the support lines, I am considering to sell USDCAD for a retest of the 1.27 low and possibly even lower. Immediate support is coming from 1.31 level (we are trading at the moment at 1.3090/95). this level as we see is not a problem and even if it does provide some support, I am going to use the opportunity to short on a bounce. Most probably it will be tomorrow, so I will try to post a live call on it. This 1.31 level should not be a problem at all because of the fact that we definitely failed to go higher and now, after the 4th attempt in last 3 months to break above 1.34 levels failed and we broke the small channel on daily chart, move may accelerate even more. Good Luck Everyone, Rezo