EUR

The Euro range is narrowing - potential breakout by tomorrow or Monday. No trade and but I have an upward bias on this - could go either way - down to 1.30-1.32 or more likely up towards early 1.4s

Great post, EMP! But regarding the Euro you just can't explain the raise and drop with the awful EU fundamentals alone. EUR/USD is a pair so you should look at the USD part as well and their fundamentals don't look better actually, especially in terms of debts.

Hi Ashraf -

I write this somewhat incognito as I, too, am a pro prognosticator in my own field - which is decidedly not forex. But I've made money for my clients for 32+ years now, so my approach must have some merit.

And I'm not much of a forum-person since over the years, I have had what must amount to thousands of forums posts either applauding my work - or denigrating it. And for a while, you certainly enjoy the plaudits. But you can really do without the negative crap.
Most of which issues from bitter people with short-term outlooks, who forever seem to spew out "what have you done for me lately?"

So, I no longer look at forums that have my name in them. But I thought I'd ask you a question that intrigues me regarding forex - and specifically the short-term fate of the Euro.

And before I do, I should say that I have read your book and applaud your weaving together the various macro- (and micro-) economic elements you do. Much of this was known to me as I've been in my field for decades now, but I did learn quite a bit.

Having said this, what then are the specific factors that lead you to believe that EUR/USD will touch 1.32 by the end of this month, as you've noted numerous times?

I fully understand Fibonacci levels, retracements, basicaly anything a technician can throw at me - because I use similar stuff in my own work for a living.

Here's my problem with relying too much on technical aspects - or even fundamental ones - too much.

What drives markets? Are markets rational? No. All financial markets are very often highly irrational simply because human beings are often highly irrational.

And when it comes to almost any market-movements, the prime motivators of market activity are what they always have been: fear and greed.

Even the great J.P. Morgan, when asked more than a century ago what he thought about the stock market said, "it is a nervous old lady with a bad stomach." Which pretty much does sum it up, J.P.

I bring this up because the vast majority of people who trade in financial markets have amazingly short memories and sometimes non-existent attention spans.

Take the direction of the Euro - short-term. Now, if we had rational markets, and we looked at every relevant macroeconomic piece of data out there - heck, if we just concentrated on the plight of the PIIGS - no sane person could believe the Euro should rise in value vis-a-vis the USD over the next months because these issues with Portugal, Ireland, Italy, Spain & Greece cannot possibly be resolved in short-order.

We have issues like almost 20% unemployment in sunny Spain; Nobel-laureate economists telling us that Italy will implode from debt; and stats coming out of Greece that are from the Twilight Zone: the average Greek worker retires with 96% of their final salary as a pension - compared to 42% for the average German worker. Reading idiocy like that reminds me of the Alice-in-Wonderland dot.com IPO craze where new issues, with no earnings whatsoever, used to increase 5-fold in one day.

Given the often hair-trigger nature of speculators - and I don't know what someone trading forex can be called otherwise - why shouldn't the proclamations of M. Sarkozy the other day just put a halt to the imminent and immediate drop in the Euro?

I mean, the guy came right out and said (and I'm, paraphrasing), "Greece will not fail. We will bail out Greece." What, that's not enough to stop the Euro's slide? That the leader of the world's
5th-largest economy has said, "no problem, Greece. Tout va bien!"?

Long-term, there's going to be a world of hurt in many EU countries as emergency austerity measures kick in.

But 1.32 by the end of this month? My question, Ashraf, is why would this happen? What additional events over the next 3 weeks can you expect that will be a catalyst of another 450 pip drop?

I've used charts for longer than many of your followers have been alive. Looking at the 1-day chart of EUR/USD, for the last month we've had nothing but a protracted sideways base forming. Why do you think that base will break downward?

You put a lot of effort into your site and your info and insights are quite compelling - and for that I thank you a great deal.

Euro/jpy seems to have failed 124 and theres a bear on bloomberg,always helps!Fingers crossed

Technically, Euro seems to be forming a circle bottom(or cup pattern if you like)and is threating 1.38. Aud is going to make a high to 9260 if we draw a line on previous high. Gold has just break a reverse head and shoulder pattern and is targeting 1160. Cad is complicated here but under 1.02 it will go down quickly.Please check it.
Mr. Ashraf's call for main trend is still valid if you put it in a larger frame and we have to allow the market for certain correction if not trend reverse.