Monday, January 7, 2013

eur/usd



Euro tries to find support (11th of February 2013)

After the collapse on Thursday Euro was trying to find support. If you look at price action on Friday and Monday (today) you will see that Euro practically stopped falling. I would not be surprised if Euro stopped falling and started going up tomorrow. 1.3430 resistance can be broken any time and Euro may threaten new highs very soon. If you looked on the left side of the chart you would see a range of two weeks at the current price area. Technically speaking this might repeat too. However, price action of the last two days show that a move upward is really possible. 

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Trading ECB rate decision (7th of February 2013)

Every trader knows that it was the big day for trading – ECB rate decision. It is obvious that one could trade this and other pieces of fundamental news very profitably. It is risky, but stops will help you not to lose more than you are prepared and profits can be very big. In today’s case you could simply place a sell stop order below 1.3494 area with a 30 pips stop loss and a take profit target at an even number of 1.3400. These releases create a lot of volatility and targets are often reached within the same day, sometimes after one hour or even fifteen minutes. Take your time to analyze what happens during these events to find out the best ways to trade the news. 



Bulls are still very energetic (5th of February 2013)

As most traders do not expect anything significant from coming Thursday data (no change in statement) most of them continue buying Euro. This will probably continue without stopping till 1.4000 area. So, any weakness of Euro should be looked at as an opportunity to add to your long position. At some point the change will come and that’s when we are going to build on eur/usd shorts. Nothing is in the horizon that would encourage me to do so.


Getting ready for Thursday data (4th of February 2013)
Euro has run a lot in the past months. And we can clearly see why. ECB is probably the only central bank (among major ones) that has not been intervening in financial markets and did not try to stop Euro from appreciation. Its’ rival US dollar was much devalued, because of FED constant stimulus and its’ willingness to continue doing that. Bank of Japan has been only threatening to intervene and ease, but has not done it yet. So, we can state that Euro should continue appreciating. It is possible that eur/usd will see some counter trend move before ECB decision or after it, but buying Euro on dips remains a strategy for the nearest future. In my opinion it should reach 1.4000 area soon. What happens later depends on new fundamentals. Short term it may go down and I am ready to sell a few Euro pairs. However, I am also ready to buy Euro on dips. 



Non Farm payrolls reaction (2nd of February 2013)

Non Farm payrolls data fell short of economists’ expectations and dollar continued collapsing against Euro. It is a fourth consecutive day of rise in Euro with around 180 pips gain. The gains are not as spectacular as they used to be, but still the rise is pretty attractive is you are long in Euros. From fundamental point of view we have to wait for next week interest rate decision by Europe and Great Britain central banks. If they do not change their monetary policy Euro will continue rising and dollar falling. Have a nice weekend.




FED is still buying bonds (31st of January 2013)

With worse than expected GDP, FED continuing its path of buying bonds and possibly worse Non Farm payrolls than expected on Friday there is nothing else, but for eur/usd to continue rising. As markets are trading on expectation it shows that it expects bad data regarding NFP. As there are no signs of reversal we simply have to buy on dips till trend changes. 



Interest rate decision (30th of January 2013)

Today is the D day. FED releases interest rate decision. We should again be more worried as to what and how they say instead of concentrating on the fact whether they keep interest rate at the same level or change it. I am somewhat surprised to see that the resistance of 1.3500 (that I thought to be final) was broken today and eur/usd jumped higher. At the time of writing it is at 1.3568. It could be a false break. That is why I want to see price action at the time of today’s announcement. If the break is real we might see 1.4250 in a few weeks time. I would not take any trades before news is released today. Too risky!




Durable goods orders (28th of January 2013)

Euro crawled very close to 1.3500 level on Friday before reversing to 1.3424 support. Durable goods orders data (if much worse than expected) can push Euro back to 1.35 area. Other than that I believe Euro bullish trend is over. We have FED interest rate decision of Wednesday and that could influence future price moves in eur/usd. Pay careful attention to the way those guys articulate their monetary policy. If something is changed in the way they see things market will definitely react to that and that would give a tone for either significant increase or decrease in eur/usd value. 




Consolidation (25th of January 2013)

So, bullish triangle was broken yesterday. The pair retraced a little and left the boundaries of the pattern today. This retracement as you may know gave us a good opportunity to place buy stop orders above the most recent high and a stop loss order below the retracement. Euro bulls are still showing power. But let us not forget that the move is really overextended and we are at a very important resistance of 1.3500 level. I expect something to happen next week. I might be wrong, but markets are running on expectations and so am I. I might be wrong, but so are the markets. I will be watching for signs of a reversal on Sunday open. 


Tight range (24th of January 2013)

eur/usd has been in a very tight range for 10 days already. It is still staying within triangle I have been talking about and it is not clear which direction it will break out. It does not really matter which, it matters what you are going to do about it. If it explodes upwards you should buy a breakout. If it collapses down, selling a break seems a good strategy too. In case of an upward breakout potential targets are 1.3400 and 1.3500. If it goes down support levels are: 1.3160, 1.3120-05 and 1.3000. 




More weakness ahead (22nd of January 2013)

I told you that I expected Euro to weaken this week. It has not done it so far. There was some bearish action today, but it was met by even more bullish action from Euro optimists. You can see it both from 1 and 4 hour charts. Price collapses down and then races up even faster. It tells me that higher prices in eur/usd are coming. 90 pips in an hour is a strong move for the pair. If you know daily range of eur/usd you would agree to that fact. Asymmetrical triangle is almost finished and we can expect a break (probably upwards) any time.



Asymmetrical triangle (21st of January 2013)



The pair is still in the process of forming asymmetrical triangle. That may indicate both bullish and bearish tendencies. Much depends on fundamental news that will come out this week. We have Europe finance ministers meeting today and tomorrow. The outcome of the meeting can influence eur/usd price moves. The chances of the pair going down to support 2 (look at the chart below) are quite good. Buying at the bottom of the triangle and selling at the top of it is a strategy till the news comes out. Then follow price action. 




 
Euro bears have come (18th of January 2013)

Euro finds a lot of bears at these levels. They have pushed Euro to new highs, but eur/usd pair will probably visit yesterday’s support 1.3255 today or when market opens next week. Unless we have negative surprises in upcoming US data (Michigan confidence) we are going to see lower prices in Euro. If the data is very bearish a new high maybe be reached even today. The trend for the pair is still bullish as long as some fundamental data reverses the trend. I am looking for opportunities to buy near 1.3250 level. If no reversal pattern is formed there I will be looking to 1.3170 level for buying. 




The pair jumps but retraces (17th of January 2013)

Euro bulls have shown their strength today across the board, but their powers seem to be subdued. eur/usd rallied into resistance area of 1.2275-95 today and is losing steam now. Support of 1.3250 is safe for now to say nothing of 1.3180-60. Selling near the above mentioned resistance is good for Euro bears and buying near the first level of support for Euro bulls. We need some fundamental factors to push the pair one way or another. 


Choppy price action (16th of January 2013)

Expect some choppy price action at current levels. The first support level of 1.3250 is under attack now. In my opinion it will be broken and move to the second support which is now at 1.3170-50. Euro bulls will become more active there and the level will probably hold. If not we might see much stronger correction to 1.3000 level. I am standing aside and not taking any action in the pair. I am bullish from 1.3170 level. Waiting for some signs of reversal upwards there. 




Topping process (15th of January 2013)

US dollar does not seem as strong as Japanese Yen at the moment. We saw tremendous strengthening of the latter and very mild strength of the former today. eur/usd saw moderate strength in the dollar, but the pair is bouncing from the support at the moment. One could expect Euro strength to continue till 1.3500 level is reached. We will not probably see such dramatic strength in the Euro as we witnessed last week, but there definitely is some room for going up. Support is around 1.3300 area now (plus minus 20 pips). Resistance is at most recent high of 1.3390-1.3410. I am not trading eur/usd at the moment. 



Uptrend continues (11th of January 2013)

eur/usd pair has been in an uptrend for some time now. It has been moving in waves and it is good for an average trader to join the move when a counter trend moves happens. Buying on dips is the way you trade uptrends. Yesterday we saw a tremendous move in the pair. It has been the biggest since 29th of June of 2012. Furthermore, the pair has made new highs today. This tells me that bullishness has not been exhausted yet and we might see 1.3500 level sooner rather than later. What happens there is difficult to predict, but I think there will be a major reversal and down to 1.2700-1.2600 level. 

Mondays are usually reversal days after strong Fridays so be careful with your longs. Profit taking might take place, which will cause the pair to collapse. However, I see 1.3500 level as a reasonable target for next week. 


Support and resistance (10th of January 2013)

eur/usd pair was able to keep its current support level1.3050 and the pair is breaking its’ current resistance of 1.3130 just where 200sma rested on 1 hour chart. The pair has kept bullish momentum and ECB data failed to break the pair down. It can also be clearly seen from eur/jpy pair. Euro holds bullish tone and I am buying on dips. It has yet another challenge to face – 1.3160-80 level that was once broken as support. It is very important resistance now. If that is broken bullish momentum will accelerate. 


Reversal took place (8th of January 2013)

By looking at today’s and yesterday’s technical eur/usd chart we can see that a lot of short Euro positions have been reversed and the jumped off its’ most recent support that is at 1.3000. Most analysts like referring to the process as positioning before the upcoming news event. Today’s price action was pretty weak and I guess not much will be done till tomorrow. Support is at 1.3085 and 1.3050. Resistance is right at 1.3160-1.3180. 

Fundamental news that will improve price action is ECB interest rate decision and press conference announcement tomorrow. Do not take very big positions before the news comes. 

eur/usd outlook (7th of January 2013)


I have often thought of starting a separate page on each currency pair instead of writing separate posts on this or that currency and I think it is about time to do it. I intend to renew the page as often as I can (maybe even daily), but I do not want you to promise that as I get pretty disappointed when I do not keep my promises. However, I do believe it is better to try than just continue procrastinating. So, let us go to eur/usd analysis.

1.3160 was a very important level for the pair. That was a previous top, which was made in the middle of September 2012. When it was broken on the 17th of December 2012 it became support. The pair just stayed above the level for a few weeks touching the point for three times and then on the 3rd of January 2013 collapsed mightily through support. It had a mild rally on Friday, but after hitting resistance of 1.3090 it bounced off. Support now starts at 1.3000. 

The sentiment is bearish because of the break of support. eur/usd is below 200sma on hourly chart and a little above it on 4 hour chart. If the range remains tight through Asian session and some reversal pattern is formed I will go short with a few positions, one targeting most recent low and one another support level that is at 1.2900 now.