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RE: EURUSD

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So, yesterdays FOMC policy statement was considered hawkish in that the statement left out the usual paragraph about 'global risk alert' and said 'sees gradual rate hikes as appropriate' raising expectations of a June rate hike, but now, with GDP slipping (to 0.5%) back to square one. I think central bankers are running out of bullets.

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Or looking like they don't know what they are doing, which they can't really...  Not much reastion from the markets to these fundamentals either, hmm...

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Maybe, although I'm conflicted on Gold.  Normally yes but it is not exactly cheap is it?  Some are saying it could go on a massive bull run despite that.  Regarding the big drop, still not sure yet but if we do get a decent drop now the next rally will tell the tale.  A drop will only take a week or week and a half and the subsequent rally 3/4 weeks and it it turns into a big drop at that point it will be towards the end of May, just before the summer...  

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BTW, I got the canned good in a year ago when the markets topped (at least unless we get new all time highs that is) so I've been a Bear for that long at least, which means I am struggling against that bias...  My trading strategy is to swing with it and hope to catch and hold for the big wave 3 down when it comes, even if that is after a new all time high.  My investing strategy is Cash Cash Cash.

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In our DX thread we are talking about a USD bounce vs drop and rate hikes or not by the Fed.  Obviously May is the soonest the Fed will hike now and most commentators are thinking June so an actual hike is a while away BUT the markets usually buy the rumour and DX is at a pivotal moment (see Dollar Index thread).  USDJPY looks set for further drops but then a strong rally could be on the cards; GBP looks set to fall imminently and USDCAD is rising and could rally strongly if Oil does indeed drop (see Oil thread)

 

The Euro is the biggest component of DX but doesn't look ready to drop just yet to me.  Of course DX can rally without EUR falling if the EURUSD cross is only rising slowly vs the others so a DX rally driven by GBP/JPY/CAD strong falls with slowly rising EUR is possible.

 

On the EURUSD I have said recently that it looks like a similar complex wave to GBPUSD but just hasn't reached it zenith yet (unlike GBP).  On the hourly chart I have a nice tramline pair now rising from my (probably) Wave 4 of Wave C (to the end of the complex retrace).  The tramline would contain the final wave 5 up to the end of the move.  Yesterday I was unsure but today I am more sure of this scenario because the rally spiked above the Apr 22 high (label brown B) with higher momentum so a Neg Mom Div is not showing just yet and this implies another leg up to me.  I am forecasting this move to continue up to the resistance zone of the previous high (label blue 2) and probably to exceed this and take a kiss on the up-sloping tramline (daily chart green).

 

Any views?

 



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Waiting for the Fed to do something for a long time now but they seem to be out of ammunition, same for the ECB. Yellon reminds me of a rabbit caught in the headlights, can't go forward, can't go back. Would like to raise rates and convince everyone everything is ok but a continuous stream of lackluster data proves it is not. Both DX and EUR/USD tell the same story on the weekly chart, essentially in a range, waiting for a push. Until a push from comes somewhere you have to assume the overall pattern will continue and look for likely set-ups intra-range.

However, as  suggests, if the likelyhood of the long expected rate hike grows strong there will be a range breakout and trend continuation.

 



 

 

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Or alternatively a drop in the stock market (possibly also commodities) could prompts a run to safety of the USD, Bonds and Gold?

 

 

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Continued poor data out of the US at 13:30 (tier 2) personal spending flat, personal consumption expenditure near flat. There are just no signs of any kind of meaningful growth in the US economy. Chances of a rate rise in our life-time, decreasing.

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But things are no better in the Eurozone and maybe worse.  Regardless of all these so called fundamentals I have a textbook second kiss on my daily tramline and swift rejection so I took a Short on the Tramline kiss.  I can't be sure if we have seen the final leg up (Ha! never am until it has well and truly turned) as the hourly picture is not so clear so I'll give my short plenty of room but with DX looking like it might also be at a turning point the odds are decent for a Short on EURUSD right now.  A small 1-5 down followed by an A-B-C retrace and fall again would seal the deal.

 

 

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More US jobs data coming up at 13:30. Though only tier 2 anything this close to NFP can give the market a kick.

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EURUSD breaks my lower tramline and is through the congestion zone.  Next target is the tramline below but will we get a kiss back on this one or not?

 



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I mentioned an alternative scenario for the USD just now on the Dollar Index thread and that I could paint that picture on the main USD FX crosses so here is what I meant.  First of all let me just say that I believe the prevailing trend for EURUSD (and therefore DX in reverse) is down.  Looking at the Daily chart we can the the completion of a classic complex wave retrace in EW terms with strong Neg Mom Div and two kiss backs on the up-sloping tramline (green).  Could it come back for a third kiss?  Yes, but this is not the first scenario (should be kept in mind though for defensive purposes).

 

Looking at the hourly chart I am not happy with the shape of the move down and recent retrace.  I can't pick out a decent wave count if the low of 10 May was the end of wave 1 and the retrace is not in a clean and obvious A-B-C (sometimes it isn't of course...) and didn't retrace to a good resistance level for me, never satisfying.  But if the current move down is not the beginning of wave 3 but the end of wave 1 then we can expect a decent retrace once it completes.  Strong support on the Weekly chart is just below and price is currently bouncing off a second parallel tramline.  (Ignore the down-sloping tramlines on the hourly they are just early visual references for me.)

 

So with such uncertainty over USD retrace or not and with JPY in retrace I will be staying out and watching for a while with my higher up Shorts protected at B/E.  If we do get a rally in retrace then more Shorts later are indicated.  If we get a strong move down the my existing shorts are in the money and adding on a significant break of lower support is the way to go.  Day traders may want to take a cheeky Long if a retrace happens, not my game.  Similar, though not as clear, set up on GBP and also on AUS I think.  CAD is all about the Oil

 

 

 



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It appears this currency pair has made some interesting moves recently namely that it has hit a 61% fib level and bounced of a interesting pivot point. Although to early to say for a break out to the upside, we have bounced off the 2nd 4H tramline and the momentum does seem to be diverging slightly. But it also bounced off my 1h tramline, which therefore that recent rally could be just a retracement, unless it does attempt to break the tramline again.

aud usd 2h.png

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Will be interesting to see how news this afternoon affects this pair. I think the bears pulled a major move pushing this below the PRT weekly support now resistance level at 11205 after a 4 day battle 19th to 24th and now trying to beat back a re-test from yesterday afternoon. The 11200 has proved significant for a while now (since Feb) and I think is key to future direction, currently the bears control it.

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I see no one has been posting on this pair for a few weeks, Brexit fears?  Following up my Cable and DX posts here is my take on EURUSD.  Short answer is Bear!

 

The Monthly long term picture is not that clear, not as clear as DX and GBP anyway.  The problem is that the all time lows and any data before 1999 is manufactured and therefore not trustworthy.  The real low was shortly after the introduction of the Euro so is the April/July 2008 high a C or a 5?  For now let's assume it doesn't matter because it doesn't.  Either way the trend is firmly down.  There are 2 possible EW counts, a motive 1-5 (which is not textbook by any stretch) and an A-B-C (red).

 

Looking at the weekly chart I am showing an alternative which denote the Wave 3-4 in purple rather than pink (i.e. part of the big picture motive wave).  In this scenario, as with the A-B-C the termination could be at parity as denoted but a much further drop cannot be ruled out at this point and no Pos Mom Div is yet in evidence to support  a major trend change.

 

The Daily shows the end of the wave 3-4 retrace and a strong counter trend rally to W2 (blue) with the classic tramline break and double kiss back followed by a sharp move down (very bearish).  This move down duly put in a small wave 1-2 to the Fib 62% and is now returning to it's downward trend.  Alas the trade to take was at 4am today at the culmination of the second 1-2 (brown on the 4 hrly chart) and as I write the market has just made fresh lows on this move down.  Bravery will be required to get in as I suspect this is now a Wave 3 of 3 and should hammer down quite hard.

 



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Yes, back down to a key level here, has been falling since Asia session. Keep an eye out for US retail sales at 13:30 BST. 

 



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So US retail data was decent.  That means the Fed can raise interest rates because the economy is on track and so USD should strengthen and stock markets weaken right?  Err...

 

Or is it economy strong stock markets strengthen and USD strengthens because it is the only strong economy?

 

Fundamentals!  Bah humbug!

 

GBPUSD commencing the predicted temporary retrace (as is GBPAUD).  EURUSD remains sluggish and is likely to turn down again soon I think with EURGBP also heading down.

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11200 still holding and likely to remain so til FOMC econ projections 19:00 BST today re; clues of possible rate rises this year.

Interesting to note gains from the disastrous NFP completely swallowed up.

 



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I'm wondering if the EURUSD is about to continue its bearish move.  I see GBP remaining more buoyant for a while but EUR look weak.  Anyone got a short term view?

 

 



 

 

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I'm thinking same, looking for a close below 1.1207 area to indicate reversal and continuation of trend down. C

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It's taking it time to decide, not surprising given the Fed release later today.  At present the price can't get past the Fib 38%.  I'd prefer to see a touch on 50% but in a major run down 38% is realistic.  Got to keep stops close (or very wide) prior to the Fed though.

 



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EURUSD may have a bit of upside in it today, I'm looking for the completion of an A-B-C retrace maybe at the resistance zone, which coincides with the Fib 62%.  No Neg Mom Div yet but it is building and a fresh high on this recent rally at that resistance zone could provide this, which would set up a decent Short opportunity (close stops just above the Fib 62%, just above the 10 June high for me.  The EURGBP also may be bearing this out with a 1-2 retrace perhaps as high as the leading edge of the recent high resistance zone, which coincides with the recently broken Triangle line for a kiss back.  Of course this also corroborates a likely move down on GBPUSD.

 



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What a difference a few hours makes.  EURUSD now entering the resistance zone with Neg Mom Div in evidence.  Might take a little while to bob about here but can't be low before a turn back down, unless the market powers on up of course...

 

Similar picture in evidence on the Aussie with GBPUSD stuck going sideways and EURGBP heading back up as predicted.  Setting up for another USD surge?

 



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ECB rate decision (12:45) and Presser (1:30pm) expect volatility, Presser in 2 parts approx half hour each, prepared statement first then Q&A.

 

BT reports massive outage of internet links and phone line disruption in many UK major cities this morning. 

 



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Hi @Mercury . What do you think of EurUsd for a short now? Candle broken 20SMA on the 4H and Daily charts - signs of a reversal perhaps? On the 1H chart there seems to be some buyer resistance however, so not sure of the strength of the reversal..

 

Also ECB later today likely to be gloomy outlook, albeit with no change to rates.

 

Worth dipping into?

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Hi   Definitely a wait and see re; ECB rate decision, not much expected in the statement section but the Q&A part could be more revealing, as per usual on big data releases drop down to a lower time frame, ignore any whipsawing and wait for consensus of direction before looking for an opportunity to join in. 

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Agree with that, I am not one to trade the data release but to wait and see if it supports my longer term projection or causes a switch to an alternative scenario.

 

Right now I am expecting a rally in EURUSD back to a suitable retrace point before the next big push down.  The alternative scenario is that this has already happened on Brexit day and the day after and we are waiting for the elastic to snap.

 

As  might say, let the price action be your guide...

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