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EURUSD: Divergence Building Up, Caution Required
Submitted by Nic Lenoir of ICAP
We have been warning for caution on EURUSD, as the market has been struggling to move lower and shows all the signs of bottoming. We have strong divergence on the 180-minute chart for the RSI, and on the daily, the second derivative of the MACD has turned, and the slow stochastic is diverging as well. The support area also coincides to the 61.8% retracement of the rally since last march and we have recently tested twice the support of the downtrend channel since the highs. We feel the market could well pull back to 1.4050 (50-dma) or even 1.4349 (200-dma).
Interestingly we see on the 180-minute chart we are breaking out at the moment through the resistance aroudn 1.3625. While we remain long term bears from 1.51/1.48, we would recommend covering shorts here at least partially or buy 1/2 month upside options to beenfit from a pull back which has the potential to be sharp especially with rumors of Greece news flying around.
Good luck trading,
Nic
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I guess this means we go back to 1150 on the SPX...
Don't count on it. On the other hand the odds are in favor to test the highs given how PPT has accomplished its mission. Yesterday was a complete disappointment.
Its interesting that the stronger Euro (v dollar) today has had only a muted effect on equities.
good eye, john. with equities, EURJPY is the key metric for risk premia.
outside of key mkt internals, today's 1 min ADV lines of each US equity index are even more laughable than 'normal'. if ya build that workspace, will help a lot during the cash.
Thanks Chop.
I've posted about this several tiems, but I think a big downdraft is imminent. But who is crazy enough to hold short over the weekend? Well I am actually.
Me too. But then again, people think I'm crazy to invest in cases of .308 and .357SIG rather than gold. In the end, I'd rather have a means of getting gold than holding gold.
I hope to God you're right. Any idea why IYR is doing a ramp job today?
probably just the normal low volume BS where anything can get pushed around. Stay with deep ITM puts on XLF and IYR becuase they both can get bottle rocketed in an instant by the president's working group on capital markets.
wow, check out what just did...
xlf and iyr have been two of the most strongest sector etf's in the last 2.5 weeks
No doubt; especially since the near term bottom on the 8th. Those sectors always get jacked during the low volume melt ups. What's new?
I wouldn't make much of today's action; friday w/ a big snowstorm in NYC, low volume in the futures
USD weakness v EUR mitigated a bit by action in GBP...
Let's see what next week brings for the EUR w/ the Greek saga unfolding before we jump to conclusions about the US markets rolling over w/o help from the EUR
watched intently too...it's like someone turned the engine off and the ship just drifted in to the close
Here a simply consideration on Greece, the Euro and all debt around.
I know everybody wants Greece to be bailed out by the Germans. This would signal the end of the Euro. If on the other side, Greece is bailed out by the IMF, I expect the Euro to go up huge.
Why? Simple...
On different sides of the world (Japan, UK and the US notably) you know for sure that if the same as in Greece happens, politicians and people will be so hangry that the only way out of it is to print.
On the other side (Greece should be thanksful to be part of the Euro) you have a region where money can not be printed out of thin air, which equate as keeping game's rules as they were designed before you were playing the game.
Would you better trust someone that change the rules when the game is ongoing or someone that keep the rules as they are, even if the cost is big for him?
Simple consideration but to me it's very clear that if IMF (and only IMF) step-in, you are likely to see the Euro not going up but literally exploding as trust in the currency (not to be mixed-up with the States or with debts on the States themselfs) would be restored.
Let's see what happens but if IMF step-in I personally buy Euro
+1
Funny how I positioned myself accordingly just prior to TD posting this.
Tw*t
What a fuckin dickweed.
You are soooooo smart.
What an arrogant twirp
To all commentors above:
I hope all of your assholes seal up so that you have to shit out of your mouths.
Have nice weekend.
You're still a Tw*t
Seriously, dude. You're a fuckin loser.
Blow me.
dude!!! you are the f*cking man!!!
feel better? :-p
Sorry couldn't hear you over the sound of his awesomeness.
Some really strange action on the FTSE versus the Dow/S&P this afternoon. US down about 0.25%, UK up about 0,5% - normally one can use the action of one as an indicator of the other. Plus the FTSE has been trading tighter and tighter after hours - a move of some sort is coming...
DavidC
Can't see it myself, the technicals aren't enought to trump the fundamentals on this one - if you're buying EUR/USD you are taking on sizable "shock" risk whereas USD downside is rather limited as I see it. I'd at least wait for a full 4hr candle print above 1.3650 before covering shorts but medium term I'd be amazed if we don't see 1.24 at some point this year.
I'd bet against that 1.24 scenario..no way that's gonna happen..and for a quick trade buying the eur makes sense because everyone has already priced in the shock.everybody is short..the shock will be the amount of euro short covering that will unfold in the next month or so
Sentiment I'm measuring expects either a squeeze or a bounce by a wide margin. That in itself not only makes me pause but also inclines that I put the dynomite down.
The broad impact seems obvious if we get it. Employing a more narrow -really narrow - strategy as far removed from that powder keg will let me sleep well this weekend.
This current candle looks like it will close above the 100 ma on the 4hr , around 1,3650.
Maybe, but I doubt it, let's see what people want to hold going into the w/e.
Here is a nice one from Jim Rogers:
http://www.digitaljournal.com/article/288143
Tim, Ben and the ECB will curse the British for striking first in the devaluation battle if this happens.
I thought that Jimmie denied saying that already this morning.
Is there an ETF that covers EUR/USD?
FXE- but tied to Euro index, not specific to USD
FXE likely ur closest one stop shop for Euro ETF
Here is my list of currency ETF's:
CYT
YCL
SZE
FXY
JYN
JYF
EUO
FXM
DRR
FXS
JEM
BZF
AYT
INR
ICI
UUP
ICN
USY
FXA
PGD
CEW
CNY
CYB
UDN
EU
FXF
FXC
FXE
DBV
ERO
BNZ
GBB
URR
ULE
SZR
FXB
YCS
Most of these ETFs have miniscule volume- useless for anyone that trades with more than pocket change.
I don't trade any of these
Are you trading with like $500? (YCL, SZE, YYN, etc etc)
No.
Front Page Wall Street Journal "HEDGE FUNDS POUND EURO"
Magazine Cover Indicator Anyone
montgomery taught that it requires 3 w/in weekly period. 4 monthly.
1. I was short this week, didn't make a dime as the "market" (GS) shrugged off bad news. Meaning the market knows something good is going to happen soon and is holding their positions and not selling on the announcement of bad news. And the news and data flow has been really quite horrid.
2. Amazing that a stock market trades this dry in the middle of a Depression.
3. So, I'm flat. I think the Euro has plenty of room to bounce within the context of its current downtrend, and that will be supportive of stocks and commodities.
4. I'm long physical precious metals, and that's enough for now. Long cash (USD)
not gonna lie, today feels like things are moving based on imminent QE 2.0 announcement. everything is up, inlcuding long bonds (ie, yields down).
taken with a grain of salt given low snow storm/end of month liquidity issues....
stay frosty.
It does feel like something is in the works for the past few weeks. Where do you think we head if & when the gubbermint announces QE v2.0?
So you think things are being pumped up artificially in preparation to be taken down again?
Hope you're not long over the weekend ETF-Trader.
Looks like the COT report from last week was bang on...duh
We are up huge on eurusd? A currency can't go down forever? Please explain more.
Stipulate- I believe/think that a relief rally on the Euro is likely...Dollar down thus. But for now my eyes are on the greeks-will the go long austerity? Spain too is faltering. Unless there is a break in the debt logjam this whole discussion is static on the wires. There will not be a break in the debt log jam so position yourself accordingly. Buy vol as it is cheap, nibble gold- if you have not previously, add as needed- it has held up well, finally, as for the rest build a good investment policy.
Thanks for the tip-- I had been considering building a bad investment policy.
just like your hygiene
Big EURO short covering rally today.
http://www.zerohedge.com/forum/market-outlook-0
who will take my trade?
sell euro tues 2 am eastern
"biiig money , I splash the pot anytime i want"
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