Recap: Yesterday left a bit of a bad taste in my mouth.
I’ve been trading for years and I can tell you yesterday was a unique day. The pair rallied nearly 350 pips from low to high – the average is right around 130 pips per day. The last time a move like this happened was September 16, 2008 – it’s not the sort of thing you plan your strategy around. I did have a short position at 2450 that I got stopped out for 65 pips rather quickly – but that is what stop-losses are for. So I always know the maximum of what I can lose. Nearly every different media outlet reported a different reason for the melt-up of the EURUSD. Some reported bad jobs data, others reported ECB liquidity… the list goes. In reality it was most likely a combination of a whole bunch of factors and, truthfully, it appears that a few big hedge funds probably got liquidated which accelerated the gains.
Perhaps ZeroHedge said it best with their post “What the hell just happened there? – Forget stocks, gold, and oil. The story of the day was the EURUSD, and the various trading desks that blew up are a result of the 2.4% move in the pair… What the hell happened there? The confluence of the LTRO termination, today’s MRO, end of quarter, the official descent into a double dip for the US, and who knows what else, apparently ended up blowing up one or more players.”
Daily Outlook: Given the confluence of fundamentals that caused the massive rise those things are hard to predict. It’s why we use stop-losses to protect ourselves. There is one warning sign I wish I would have heeded though, to be honest. Take a look at the daily charts, specifically at the bearish channel I pointed out yesterday. Looks a little different on the daily charts doesn’t it? In fact, it looks like a bullish consolidation pattern called a pennant. Is that a 100% signal? Of course not. Nothing is forex is. TIF – this is forex. But it was a warning sign. Would my analysis have been any different if I had noticed it? Honestly, probably not. I would have still been extremely bearish. Take a look at that daily chart – the trend is down.
But I might have been a bit more cautious in my analysis. There are a lot of beginners that read PipHut and this is a stark reminder to always use stop-losses, use good money management, and to always use PipHut in conjunction with your own analysis. I took a loss yesterday, but it was just a minor ding in my equity thanks to my stop loss and solid use of leverage. In short – I pride myself on getting it right, but I fear that I missed that one yesterday :/.
Trading Idea: It’s Friday (I normally don’t trade on Fridays) and after the theatrics of Thursday I’m glad to sit this one out. If I was trading I’d be looking for short-term bullish setups. Specifically a long at 1.2350 (pullback to former channel resistance) offers a long setup to 1.2450 for 100 pips profit. A more aggressive trade would be a long on a sustained break of 1.2560 (a flag pattern appears to be forming under this level on the 4h charts) with targets to 1.2585 and 1.2610 and 1.2640 for 90 pips.
Have a great weekend.
Quick Links:
Sign up for free forex signals via email here
FAQ on these signals
Forex Candlestick Alerts
Forex Income Calculator
Forex Market Hours
Forex Forums
Goldman economist cites global recovery uncertain
Released: July 4, 2010 2:10 p.m.
Last edited : July 4, 2010 2:09 p.m.
LONDON – Global economic recovery remains uncertain. The Chinese economy seems to grow less this year than expected and the messages from the U.S. ” worrisome ”
That writes America’s top economist Jim O’Neill, in the British newspaper Sunday Telegraph.
O’Neill , head of economic department of the bank Goldman Sachs , is particularly concerned about a slowing growth in China .
If the growth rates there actually considerably lower than expected , ” That is bad news for all of us ” said O’Neill . Goldman Sachs recently lowered the growth forecast for China this year of more than 11 percent to 10 percent. Only when the economy is still performs less well than this , there is reason for concern, says the economist .
Dangerous
A weaker than expected China is especially dangerous in combination with substantial savings measures that European economies have imposed themselves this spring and a weaker recovery in the United States , says O’Neill .
According to him the messages from the U.S. becoming less optimistic . Especially the figures on the housing market are getting weaker. In addition to this, consumer spending at a low level.
From: THE NEW YORK TIMES
E.U. Plans to Deal With Debt Crisis Run Into Bumps
Thank you….it was hard for me to figure it out on my chart.
hello friend, have you see the inverted Head & Shoulders formation in the daily eur/usd, the upside prevails, after the Flag in the daily chart, signals EUR/USD gains.
Rates aren’t moving much so far..And with the holiday carrying over today expect it to remain pretty quiet
hi all
maybe will see 1.2640/70 today :-)
good day for all
and what you think guys anyone agree with me?
i think we will see 1.2615 .. but i dont know if the resistance line will hold or not.
anyone agree?
Hi all
hi @truckingruby
GL today :)
im off to get some sleep .. see you guys in a few hours
Last week’s high was close to 38.2 fib level from march’s high to june’s low.
Hi All
Whos agree this week Eur/usd will be back below 1.2340/1.2150?
Euro Rally Defies Fundamentals, But Not for Long
Fundamental Forecast for Euro: Bearish
- Spain passes a critical auction and the ECB injects liquidity, conditions still tense
- German unemployment levels fall for a 12th month
- Will EURUSD’s advance run out of steam, or is this a genuine reversal?
Has fundamental reasoning broken down for the euro? It wouldn’t be the first time if it were to happen; and it certainly wouldn’t be the last. This past week, the euro sparked an aggressive rally through the beginning of Thursday’s session that ran in direct contrast to the risk aversion that the capital markets (equities, commodities, bonds) were reflecting. The breakdown is in the euro’s position as a risky currency over the first half of this year. While some currencies are considered risky currencies because of the excessive levels of capital built behind them in an effort to earning high yields; other currencies maintain a direct, positive correlation to investor sentiment because they are fundamentally and speculatively risky. This is the case with the euro. A future of weak economic growth (with a few EU members facing a second recession), interest rate potential set to the distant future and the constant threat of a financial crisis plagues the shared currency. So, how long can the euro advance – especially when sentiment itself is tumbling?
The primary concern for the euro (and global sentiment) this past week was the success of a key bond auction and the expiration of the ECB’s 12-month Long-Term Refinancing Operation. Both of these events would occur without a crisis; but that does not mean that they were positive developments. On the contrary, Spain’s 3.5 billion euro auction drew weak demand (1.7 times the offer) and a higher yield (cost for the government). Sovereign efforts to raise capital will be an ongoing concern for the Euro-area. As of now, there are only two auctions planned by Germany and Austria; but neither is considered to be in exceptional financial distress. What traders are really concerned about is the ability of PIIGS and periphery European countries’ ability to access to the markets. A short-notice auction (Spain has to raise 24 billion euros this month) or an event that will make such an operation inevitably more expensive (a downgrade) will once again put the single currency back under bearish control.
Another sustained concern is the health of banks and lending institutions in the region. Relief that the region survived the expiration of the 442 billion 12-month lending facility this past week will quickly wear off. Traders will have to reconcile the fact that firms still asked for 243 billion euros in three-month and six-day loans. That is not a sign of a healthy market. On that note, we will monitor the ECB’s follow up call on its weekly refinancing operation and for any unexpected developments involving the health of particular economies’ banking systems (trouble is inevitable given enough time). For a scheduled take on the system, we will also watch the ECB rate decision. There will be no change to the benchmark lending rate; but changes to facilities, comments on the health of the region and plans for further purchases of sovereign government debt are all possible.
Risk appetite and financial uncertainty are the keys to the euro’s dominant trend; but short-term volatility could very well be a factor of scheduled event risk. That being said, the docket is relatively light over the coming week. Potential top releases in Euro Zone GDP and German CPI are diminished by the fact that they are revision numbers. Instead, we will have to garner an assessment of the regions underlying health. German factory orders and production activity, along with Eurozone investor sentiment and retail sales will give a broad coverage of all the major players in the economy.
Still very little movements as most pairs stay in a 5 point range..87.85 is a small pivot in usd/jpy
@ nelson — I´m not sure but I wish haha
Sive Morten on FPA forum forcasted this move…and if u just check last important events from USA vs. EUR u will se this is going right way and i was just waiting this signal now go up to 13100..and there will probably be (perfect) SHORT to 1.14~1.16….wr,tadej