Jump to content

EURUSD is the most complicated chart I've ever seen! But the fundamentals are clear


Mercury

Recommended Posts

Does anyone else think the EURUSD situation is a mind (you know what!)?  Perhaps that is one reason no one has been posting on this cross...

 

The Fundamentals argument

In terms of fundamental, as I have said before (and even before Brexit day), my feeling is that Brexit is worse for the Euro than GBP.  I believe Brexit is the beginning of the end of the EU project, at least in its current form (hopefully it comes back as a revitalised EEC), and certainly the death of the notion of a United States of Europe.  Greece hasn't been solved, Spanish youth unemployment is an eye-popping 45% and soon they won't be able to come to the UK for work.  French ultra socialist president's policies has driven the French to the UK but that will end now (or be harder at least).  Germany are not happy with Merkel letting 1 million refugees in and bailing out the rest of the EU.  Italian banks are on the verge of collapse.  It goes on and on.  French and Germany elections coming up will be pivotal and Spanish elections have thrown up an impasse.  How soon before emerging Italian protest parties start calling for an election and the Greeks start calling their anti austerity government on promises made?  And that is just the politics, clearly the economy has been in the dumps for ages and Draghi's policies are getting more and more desperate (it smells like Japan and the UK are well off out of it!)

 

The Technicals

So down is the order of the day from a Fundamentals point of view and also from the technicals long term picture in my view.  If you look at my Monthly chart below a clear picture emerges for me.  A trend down since Apr 2008 that has steepened since May 2014 and it looks like it could blast through parity and head on down to all time lows.  That is a potential halving in value vs USD from where we are today and a drop of 2/3 from the top.  That is Armageddon territory, but maybe that is what we will get across the entire financial system so could be exactly right.

 

Now for the complicated part: looking at the Daily chart the market made a Wave 3-4 retrace between May and Aug 2015 and then price has been in a sideways move with direction unresolved.  (If the Wave 4 is a complex retrace then a higher high than Aug 2015 is possible, although it is hard to see that at present unless Draghi or one of the other CB numpties does something dramatic.)  The whole move is currently encompassed in the Monthly/Weekly chart down-sloping tramline pair (purple) and I have a set of decent retrace tramlines (green) with very good touches plus a tramline break and double kiss back on the middle tram and recently a similar smaller one on the lower tramline.  The lower tramline also cuts through the top of the price gap on Brexit day and a possible incomplete A-B-C pattern sets up a retrace top near the 62% Fib off the Brexit top and bottom.

 

However, when you look at the 4 hourly and hourly things become tricky because the A-B-C is no longer clear and in fact the retrace could already have happened on Brexit day (to the Fib 50%).  In addition on the Hourly it looks like a Triangle consolidation formation is in play that should break downwards now that we have had a fifth touch (pink labels).  Very confusing!

 

Conclusion

Th big picture is down, with a possible higher high retrace to post a new Wave 4 before a collapse but unlikely unless there is major CB interventions.  The short term picture is conflicting with either a consolidation Triangle showing a drop from here or an incomplete A-B-C showing a rally to Fib 62% and then a drop.  Proceed with caution and keep stops close and watch out for continuing whipsaw price action.  If price breaks the wave 1 low (black on hourly) then this is clearly a short opportunity but watch out for a retrace to support/resistance taking out close stops.  If price rallies from the indicated support level forming a wave B rather than breaking lower then a short term long is possible up to the 62% Fib where a turn down is another long term Short opportunity.

 

This one really requires patience and the strictest trading risk management discipline.  However if we can find the right entry points there could be 1000s of points on offer long term.  Got to be worth tracking right?

 

EURUSD 160715 Monthly.png

 

 

Link to comment
  • 3 weeks later...

So far so good with my road map projection for EURUSD and in keeping with my parallel projection of a retrace on DX.  The market gave us a bounce off that support area at what I believe to be a Wave B of an A-B-C retrace and is now approaching the upper resistance zone, which could offer a decent change of a Wave C termination to the retrace prior to a strong move down.  The only slight fly in the ointment is that there are other possible termination points just above the resistance zone being a 62% Fib and daily tramline resistance (Daily chart).  With Neg Mom Div building a confirmed turn around the resistance zone has to be a decent bet with the alternative higher termination point a second option if the first fails.

 

Having ridden the wave C up I have now cashed and am seeking a Short on this market once a turn presents itself.

 



Link to comment

Archived

This topic is now archived and is closed to further replies.

  • image.png

  • Posts

    • Blockchain and gaming complement each other nicely. Their fusion has enabled real rewards for gamers, something that traditional games don’t offer. What’s more, BlockchainxGaming effectively manages the ownership and transaction history of game characters, items, etc, enforces property rights, promotes transparency, stability, reliability and improves fun. As blockchain and NFT-based games continue to drive the game market's growth, the hunger to play more and earn more deepens. Nada Protocol is proposing a blockchain technology and ecosystem with customized structure that will fuse with the global mobile game market and NFT blockchain game market, satisfying game players’ cravings with a more immersive mobile game experience where they can own and trade the items they earn from the game. NADA focus seems to be centered around creating a fun blockchain gaming ecosystem that adds the value of economic activity to the pleasure of gameplay. One of the most significant of its core features is a buzzing marketplace where users can conveniently find the items they want and trade them with other users. Much of the activities in Nada marketplace is controlled by NADA token, a reward-type token built on the Hedera network, and currently building up liquidity to list on Bitget. What’s your thought on this fast-growing game and its chances to carve a niche for itself in the competitive gaming world?
    • Thanks very much, @KoketsoIG. I hadn't discovered the drop down menus - it all makes much more sense now! It's odd about the E1 contracts - it must be a new change, because I'm in the UK and I currently hold some of the E1 positions that I opened a few weeks ago. Anyway, at least now I understand what's going on. I'll try not to bother you with too many questions as I get used to the new platform! Best wishes, Cate
    • Tematica CIO, Chris Versace, thinks so. He tells IGTV's Angeline Ong why he thinks NVIDIA's parabolic share price trend could continue for some time. Written by: Angeline Ong | Financial Analyst, Presenter and Content Editor, London   Publication date: Thursday 22 February 2024 17:07 Versace believes this even as the chip giant’s CEO told analysts that there was no way the company can "reasonably" keep up on demand in the short term as the company ramps up production. (AI Video Summary) NVIDIA's impressive earnings results Chris Versace, the Chief Investment Officer (CIO) of Tematica, recently sat down with Angeline Ong to chat about the latest financial results from NVIDIA, a popular technology company. Despite some concerns about meeting high expectations, NVIDIA impressed everyone by delivering impressive results, especially in its data center business. In fact, the company even provided higher guidance than expected, which led to increased expectations for its earnings per share (EPS) and higher price targets. Potential challenges in meeting short-term demand Versace believes that NVIDIA could be valued at a whopping $950 per share based on its compound annual growth rate. However, there might be some challenges in meeting the short-term demand as the company ramps up its production. Even though competition might cause prices to decrease, there is still a strong demand for artificial intelligence (AI) from major companies and investors, which will likely continue for several quarters. Versace explains that AI is currently at a similar stage of development as the internet and the dot-com bubble were in the past. Billions of dollars are being invested in generative AI technology, which has significant long-term potential to disrupt various industries. There is, however, a risk of there being too much supply in the market, which could lower prices. NVIDIA's impact on higher treasury bond yields and rate cuts On a different note, the bond market has been affected by NVIDIA's impressive results, resulting in higher treasury bond yields. As a result, investors now expect interest rate cuts to begin no earlier than June. Versace mentions that the timing of these rate cuts will depend on upcoming economic data. Recently, inflation data has been moving in the wrong direction, leading to a more cautious sentiment from the Federal Reserve (Fed). If the economy remains strong and the Fed cuts rates too early, it could worsen inflation. Therefore, Versace believes that the Fed will wait for sustained data aligning with their goals before making any rate cuts. Looking ahead, Versace points out the key data releases for the following week, such as the final January manufacturing PMIs and the January PCE price index. These reports will provide more insight into the speed of the economy, job creation, and inflation. If the PCE index moves in the wrong direction based on previous data, it could indicate that the Fed will wait even longer to cut rates.     This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
×
×
  • Create New...
us