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Nic Lenoir Takes Goldman Head On, Says Time To Sell EURUSD Is Here

Tyler Durden's picture




 

From Nic Lenoir of ICAP

Not that many layups or exciting trades in the G10 out there with equities in a slow melt up and the long end in Fixed Income stuck in a range for the last month. If you missed out on the sell-off in metals or did not have the UK GDP data ahead of the market don't despair just yet, we have a very interesting set-up to sell EURUSD here.

We had the first EFSF auction yesterday and it priced in better than expected, with Japan taking down 20% of the issue (clearly they don't have enough debt of their own that they need to get some of that peripheral Europe action). As always leading into the auction PIIGS sovereign CDS contracted big time as the ECB and their Asian rescue team ramped up the market to boost spirits and shorts were squeezed into oblivion. Yet in the background the political picture in Ireland is deteriorating, and the structural flaws that are forcing the PIIGS into depression are still well in place. So is this another case of buy the rumor sell the news? If history is any guide, cycles between waves of panic are ever shorter during this type of crisis, and quick fixes end up being fade opportunities.

Technically the set-up is very interesting here. We stand below the 61.8% of the sell-off since the November highs, the hourly divergence is staggering also. I strongly favor shorts here. Less convinced traders traders can wait for the break of the trend support which comes around 1.3640. Given the recent advance I think we should see a retracement back to at least 1.34 even if we are to utlimately advance further. I am bearish EUR as I don't believe this currency has a place in this world anymore, but even raging bulls should be cautious here.

Good luck trading,

Nic

 

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Wed, 01/26/2011 - 11:00 | 905951 Bigger Dickus
Bigger Dickus's picture

Sell eur=sell stocks

Wed, 01/26/2011 - 11:10 | 905982 Cdad
Cdad's picture

Correct.

Wed, 01/26/2011 - 11:08 | 905972 RobotTrader
RobotTrader's picture

1.34 is definitely possible.

But there is nothing bearish about the EUR/USD chart at all.

Wed, 01/26/2011 - 11:14 | 905991 Ferg .
Ferg .'s picture

From an Elliot perspective the structure is bearish . 5 waves down from the November high and a clear textbook 3 wave ABC correction from the January low ending at a Fib retracement , solid horizontal resistance and where wave A is equal to wave C .

Wed, 01/26/2011 - 11:32 | 906068 4xaddict
4xaddict's picture

ABC bottom 100% extension at the 1.3818 level and the DiNapoli overbought level coming in at 1.3835 looks like the logical topping point for me as they wash an rinse the weak shorts out of the game. Don't hide your stops just behind the 61.8% level, it's too obvious to everyone involved.

4x.

Wed, 01/26/2011 - 11:48 | 906125 etrader
etrader's picture

Looks like the EW crew are counting to fast as usual.... ;-)

Label the a-b-c pattern  (w) The correction an (x) and now were going back up in a (y) which will give the higher 1.40's handle target.

Wed, 01/26/2011 - 12:08 | 906196 Missing_Link
Missing_Link's picture

From an Elliot perspective the structure is bearish

...  therefore, the actual structure is bullish.

Wed, 01/26/2011 - 12:16 | 906218 etrader
etrader's picture

True,

They seem to be missing the option, that their "clear" 3 wave a-b-c  could also be 1,2,3,4 with an extend 5th, that give the appreance of a 3 wave pattern.

Wed, 01/26/2011 - 11:18 | 906012 Orly
Orly's picture

Nothing at all?

The RSI has been in decline for two days and the Accumulation/Distribution has also topped and is turning down.

I'm sure there's more.

Wed, 01/26/2011 - 12:01 | 906172 orgonor
orgonor's picture

me thinks we will see 1.50+ before the euro starts its way to 1.10

Wed, 01/26/2011 - 11:09 | 905977 scratch_and_sniff
scratch_and_sniff's picture

"I don't believe this currency has a place in this world anymore"-Epic. In the meantime...

Wed, 01/26/2011 - 11:13 | 905985 alien-IQ
alien-IQ's picture

I'm waiting for DXY to cleanly break above 78 before going short (which I'm looking forward to doing). I guess that would pretty well coincide with EUR/USD break below 1.3640.

PS: Intraday uptrend on the DXY 5 min chart just broke...(sigh)

Wed, 01/26/2011 - 11:13 | 905989 satansanus
satansanus's picture

combine this with SOTU and lighten up on EM for a lil IMO

Wed, 01/26/2011 - 11:14 | 905992 Max Hunter
Max Hunter's picture

Dow 12k hats available yet?.. LOL

Wed, 01/26/2011 - 11:19 | 906017 bunkermeatheadp...
bunkermeatheadprogeny's picture

The real eye in that storm is the CHF.

Wed, 01/26/2011 - 11:26 | 906023 virgilcaine
virgilcaine's picture

$ 1.36 for a basket of insolvent countries sounds reasonable ..no?  where can one get in on this great deal.

Davos 12k party time...!  

Wed, 01/26/2011 - 11:27 | 906049 spartan117
spartan117's picture

I thought you were referring to the 50 States for a second there.

Wed, 01/26/2011 - 11:23 | 906038 satansanus
satansanus's picture

12k

HOOKER BREATH!

Wed, 01/26/2011 - 11:32 | 906053 virgilcaine
virgilcaine's picture

Bloombrg with a Dow 12k Slot Machine!  yes.. Official Mkt Top signal mechanism.

Wed, 01/26/2011 - 11:37 | 906085 virgilcaine
virgilcaine's picture

Davos Male Escorts are in High Demand...Bankers are in party Mode.

Wed, 01/26/2011 - 11:53 | 906144 SheepDog-One
SheepDog-One's picture

Someone junked you...looks like Geithner was cruising thru Zerohedge.

Wed, 01/26/2011 - 11:40 | 906104 Padrone
Padrone's picture

"I don't believe this currency has a place in this world anymore"

I dont agree. While the ECB sets the political agenda to prepare for european bonds to be issued;

It seems that when things get worse for the eur strategically it only provides more force for reforms, in favor of the ECB. Wouldnt bet on eurusd going down.

Wed, 01/26/2011 - 11:47 | 906124 margaris
margaris's picture

EUR is here to stay. Get used to it.

Wed, 01/26/2011 - 11:50 | 906133 johny2
johny2's picture

Good luck Nic, I think predicting eur/usd becouse: "I am bearish EUR as I don't believe this currency has a place in this world anymore" can be a very fast way to lose your money.
While euro is a fiat currency, so is dollar, therefore hard to see one surviving if other fails.
By the way, word for Portuguese for gold is " Ouro "...

Wed, 01/26/2011 - 12:04 | 906184 orgonor
orgonor's picture

better wait for  the euro to hit 1.50 -1.55 these next months...then sell it hard

Wed, 01/26/2011 - 12:20 | 906236 walküre
walküre's picture

EURUSD 1.35 is my personal equilibrium.

Not too expensive for Europe to compete, not too cheap for the US to have a fighting chance in hell to realize some of that majic "innovation" BarakObamaMubarakBenAli was speaking about.

Egypt in chaos will mean that the Saudis are sweating bullets by now. Means that every oil trader in the world is starting to look at options.

Debt crisis here. Oil crisis next?

Wed, 01/26/2011 - 12:21 | 906239 Fortunes Favor
Fortunes Favor's picture

No doubt a rally in US$ selloff in Euro will coincide with rally in treasuries. Take a look at the set up of TLT @ http://rosenthalcapital.com/blog/

Wed, 01/26/2011 - 13:07 | 906422 Josephine29
Josephine29's picture

Thanks Nick as ever for your thoughts and insights.

Wed, 01/26/2011 - 13:31 | 906492 HUGE_Gamma
HUGE_Gamma's picture

Im short here 1.3685

SL - 1.3885

Target - 1.3365

Wed, 01/26/2011 - 15:10 | 906794 omer10
omer10's picture

When will you stop calling tops Nic?

Wed, 01/26/2011 - 18:44 | 907596 alien-IQ
alien-IQ's picture

the DXY never broke above the 78 mark I wanted as confirmation so I held off from shorting E/U. Then the Bernank spoke and fucked the USD right in the ass.

We're goin Zimbabwe, kids. Lets face it.

Thu, 01/27/2011 - 10:14 | 909099 PeaBird
PeaBird's picture

Nic, you may be correct in your assessment about the EURUSD short term, but it is NOT Goldman you are taking on, but instead, China.

It started with Greece and the Chinese, moved to Portugal and the Chinese, and next will be Spain and the Chinese...and a little later will be Italy's turn.

According to WGC figures from their latest Q4 2010 report, the Italians have a sizable amount of gold in reserves, and so do the Portuguese.

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