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Eurozone

STUMBLING the EURUSD LEGS BY THE DAYKEEPING THINGS SIMPLE ON THE EURUSD (1 day, log scale) I couldn't believe EUR could show itself to be THIS strong. It's a crazy week. Shorts were stopped out - of course. My wrong. - tops had been tested, and have now been broken (on heavy volume) - we've moved outside of the range - expect retracement first, and on that retracement, have a very good look at how the RSI evolves: the RSI needs a proper line-up (= NO oversold reading) in order to be looking for the next (bullish) up leg. Until then, I will definitely stay flat - I want to see support first with healthy internals. Longer term picture (see the monthly chart): nothings has changed. So a possible leg up (along the red resistance line) may take it to 1.18 (Fib level) or even 1.22 (50% retracement level). But that will be about all of it. The killing of the EUR will simply take a much longer time, let's see what happens in 2016. The RSI was already holding up, but remained in neutral area. The recent spike pushed it to overbought levels. That is a good sign - being the first condition for a bull-trend to develop on the daily. Now, on the next leg down, we should NOT see any oversold reading in the RSI (and I doubt we will) in order to be able to start looking to the next leg to the upside.
by Consigliere_Constantino
STUMBLING THE EURUSD legs by the MONTHLet's look at the really big picture here on the EUR/USD- the MONTHLY chart (log scale). Note: this is of course NOT suitable for trading. Beware. Usage: - protecting your savings (by going into USD) - determining the overall trend (which pressure prevails, when going down to lower time frames?) - as well as determining important support & resistance levels we might otherwise forget about. Concluding: continued downside pressure is what you'd be looking for,, the current frenzy in EURUSD is NOT changing that at all. When trading the shorter swings, positions to the downside should be taken around 1.19 / 1.21 (now compare these levels to those on the daily chart - hey, surprise!). I am convinced those levels won't be breached, setting us up for the next leg down to parity. By then.... PERHAPS.... a positive RSI divergence can form (but this is even farther ahead people!) Fib target level: 1.007 Personally, fundamentally speaking (!) I would not be surprised to see that break, too. To then see the EURUSD retrace all the way to approx. 0.90). However, that's highly speculative and there's NO way of telling so from this chart. A collapse in Euroland might cause it, or a worldwide flee into the 'safe' USD might be a cause too. The good thing: as long as we stay alive, we shall see it either happening - or not. The market will tell. On a final note: there is definitely NO positive RSI divergence yet. On the contrary: the RSI is now just CONFIRMING the negative mode for EURUSD. Continued pressure DOWN is therefore what you'd be looking for.
Short
by Consigliere_Constantino
1
Stumbling the EURUSD legs by the dayKEEPING THINGS SIMPLE ON THE EURUSD / UPDATE (1 day, log scale) - tops have been tested, but could not get broken (even despite heavy volume) - we're ranging, now down again - note that the attempt to break the downward resistance line seems to hae failed - RSI is showing no bullish signs, though it is holding up. It broke the resistance line, now a retest. However, it's in neutral mode, and did not produce an overbought reading on the most recent leg. That serves as a warning: there's certainly not an uptrend. At least not yet. So instead, expect the downward pressure from the weekly/monthly to take over again, keeping EUR USD in the trading range. In all: re-test of 1.08-ish is the likely scenario. Again. Can it then hold, or will the higher time frames finally push it through there? Again, patience is needed.
Short
by Consigliere_Constantino
Why isn't the Euro weaker?It could be said that it is slightly strange that the Euro isn't weaker. As of writing, EURUSD is trading at 1.1040 after seeing lows of 1.0458 back in February 2015. From March last year until February this year, EURUSD was in a very steep downtrend with a range of ~3500 pips. Since then, the pair has remained relatively stagnant, after seeing a bounce off of the 1.0460 level. With the Greek situation weighing and another round of Quantitative Easing, you probably would have thought that the Euro would have been much weaker. However that is not the case, evidently. We have 3 fundamental beliefs with regards to this. 1) The market has been poised for a US rate hike for a while. However, to justify a rate hike, consistently strong data has to be printed, but the US has not been able to achieve this as of yet. Combined with this, short term rate differentials would in fact suggest that EURUSD should be above current levels, as well as inflation expectations. These correlations are slightly weak, however. 2) Uncertainty in Greece is causing indecisiveness. Investors do not actually know how Greece will leave the Eurozone, as it has never been done before and there is no real procedure for a country to leave. On the flip side, Tsipras has suggested an extra EUR 60bn to be provided to Greece for the next 3 years. This seems like it would not solve the underlying problem and merely extend the time it takes to pay their creditors. Investors are aware of this. This uncertainty could be causing the lack of Euro weakness. If and when a deal is reached, a rally and fade could most probably occur (i.e a spike in price and then a fall). A good quote for why this situation is taking so long to resolve: 'if you owe the bank £500 it's your problem; if you owe the bank £5m it's their problem.' 3) Many people believed that the Eurozone would be like Japan in terms of reintroducing QE (deflation and QE for a long period of time). However, investors began unwinding short positions when they saw that Eurozone data was actually improving post-QE introduction. This lead to an increase in the price of the Euro which is still having an effect today. Please add comments. If you agree or disagree, I'd really like to hear it. www.admiralmarkets.com Follow us on Twitter: @AdmiralMarkets
by DavidBelleFX
10
Watch for the Bund to bottom around 148.50The sharp rise in sovereign yields in Europe has taken a lot of people by surprise, and the sentiment in the market is more and more bearish as people are starting to believe Bill Gross's "short of a century" statement made two months ago. We should all be asking ourselves if it's reasonable to expect yields to keep rising over the long term as the ECB will clearly continue buying up excess supply for the next 15 months. If you think this is the case, then you must believe that the euro will head back above $1.20 during the second half of the year (this isn't necessarily out of the question given the risk with Fed rate forecasts). Whatever you may think on a fundamental basis, you should be watching the Bund's long-term bullish trend line closely in the days ahead. This support comes in at around 148.50, which is the 50% retracement level from the 2013 lows to this year's highs. Any daily candlestick indicating a bullish reversal after having tested this support would make me want to attempt a long strategy. I'd like to see the EUR/USD hit $1.145-1.15 with the Bund at support to have the best timing possible on such a strategy.
GLong
by ABRAK75
6