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by Ashraf Laidi
Posted: Feb 20, 2010 5:00
Comments: 30765
Posted: Feb 20, 2010 5:00
Comments: 30765
Forum Topic:
EUR
Discuss EUR in this thread
If ECB does not devalue along with USD JPY GBP and PBOC stands stubborn with Yuan pegged in a whatever flexible band to USD , we can well assume USDx reaches a record low below 70.
If BoJ BoE devalue by monetizing, ie. QE and ECB doesn't we can see EURUSD around 2 ( no I don't need any waves for that only linear algebra) . However that will kill the Euro. Because along with austerity we have added competitive disadvantages for EUR priced products on the world markets, which is tough especially with exports to China. Austerity reduces demand within Eurozone. Once the herd of polititicians and CB officials realize the situation it will be too late
as unemployement which is now 20% in Spain will explode to depression levels around 50%.
I keep my forecast EUR will disappear in 2011 forever if PBOC does not yield.
one of my guess, small amount qe followed by eur blow below 1.35. china quickly yield.
as a result, both you and ashraf are right. :)
in my opinion, qe will come before november. and if china yield before qe, they must do something in next 2-3 weeks.
Not sure if your Q is in the context of fundamentals or technicals but for me personally I find the fundamentals for the "global" perspective have never been more complexed so whilst having a great interest in all the correlations in play I make sure my trading is purely based upon technicals.
Starting with the monthly chart perspective for the EURUSD a significant high was made in July 08 following a long move up from Oct 2000 low. Since the 08 high the market has been correcting the move up. My targets project a minimum level at 1.1436 to 1.1212 with a higher probabilty level at 1.0432. If EU goes to below 0.9900 then it will likely continue on down to below the Oct 2000 low which was at 0.8230 and the "correction" would no longer be designated a correction. At that point the technical map changes.
Now referencing the daily chart the market is currently correcting the move down from the 1.5143 high made in Nov 09 to the 1.1875 low in June this year. This is shaping up as a "simple" corrective pattern ABC (3 waves). Wave A up completed at 1.3333, wave B down at 1.2586 and wave C up still in progess.
I have minimum target level for completion of wave C up at 1.4042 although price has already satisfied the more classical chart analysis target when it reached 1.3690 yesterday. Other valid levels for termination are at 1.3795 and 1.3895 but 1.4042 is my preferred target.
If I have my analysis wrong I shall be alerted if price exceeds an important cluster level at 1.4440ish. That event would require me to change my bias to one of two possible alternate counts. Whilst there is a very great degree of subjectivity to applying fundamental analysis I'm afraid that technical analysis also has some degree of subjectivity so we cannot expect to be right all of the time. What matters in this endeavour is to know exactly at what point we are proven wrong. i.e never marry our analysis, it is only a romance until validated.
My main current concern with EU is the move up from the 1.2643 low made on the 10th Sept lacks structure (pattern). This makes it difficult to narrow down a completion target for the next significant high. IME when we see an impulsive move like this lacking any structure very often the entire move will be equally rapidly retraced. Therefore I am on alert for anything to happen. Ideally price needs to correct down several daily bars from where it is now and then make a final move up to the area of 1.4042/1.4440.
Trading this move up on a daily timeframe basis requires the use of a trailing stop. Ideally playing at least 3 units so each can be taken off at significant target levels. The trailing stop is gradually tightened as the market becomes over extended and signs of momentum decline.
Hope this gives you some food for thought. You need to develop your own maps to navigate the markets. Things that suit you personally. Otherwise you will be completely lost in the fog with your GPS broken and that can be a very traumatic experience !
raised for Eur.
However the race stops hard on the slightest hint from PBOC on appreciation and will totally reverse if PBOC is eventually forced to hike.
My money flow indicator system shows that in US fx trade there is no big selling of USD versus EUR this happens in London and asian trade.
I hedge my long position with a stop sell order which is twice as big as the long and adjust the stop.
Although it is well possible that USDx drops to 72 and EURUSD is around 16000 to 17000
because if the PBOC does not yield ECB will.
The run-up shud be now at the stalling stage
$ is in over-sold Territory
Now slightest Bad-data and Bank-Fears in Euro-Zone can see Tails turn reverse for Euro
Be Cautious from Now onwards
Its Time to initiate Shorts
Closed at Top today near 1.3800 levels
Euro is Getting capped
Today it closed at its Top-peak
I expect a toss Down from Monday due to profit-taking
1200 pips in 15 trading days is too fast a journey
If QE doesnt happen Which i Fell will be the Truth then Euro will skid on a banana-peel
Now ride the Trend and be Happy
Come next-week be cautious 250 pips downside can be seen