EUR crosses/EUR/USD/Technical Analysis/Trade Ideas

EUR/USD: I’m struggling to find reasons not to be bearish

  • After the debacle with Cypriot bank accounts, I have even less confidence in the EZ to get things done right.
  • Unemployment is a serious issue across the Zone and growth is non-existent.
  • The US economy has been picking up in recent quarters but Fed QE policy is still a concern for USD bulls.
  • The technical picture is telling me nothing, with range-trading imprinted across most time-frames.
  • The crosses look mixed; EUR/AUD for one still looks technically bullish but EUR/GBP has turned soft. EUR/JPY has come a long way in a short time and the lack of bullish momentum in EUR/CHF is definitely a mystery.

Conclusion: I’d be waiting for exhaustive stop-driven spikes to sell into and it may well be that we are currently experiencing just such a spike (but a break above 1.3200 will undoubtedly set off more stops).

  1. Having been long from 1.3075 with anticipation of a 1.3300 ish target I hope you are wrong. However I bow to your experience & wisdom & can only hope.

  2. I’m just thinking out loud Jag in the hope of some lights coming on 🙂 Good luck with your trade, but if you hear reports of China selling ahead of 13200 then perhaps booking some profits mightn’t be a terrible idea 🙂

    1. > There are some big event risks surrounding Fed/ECB. Maybe we’re going to see some sharp whipsaws in this pair beofore all is settled. Placing stop-loss in this environment is really tricky…could end up being the feast of dealers!

  3. Agreed Sean, I’m the same. Putting aside last night’s stop hunt, I am puzzled by the E/U’s levitation over the last 3 weeks, but then again I might have over-discounted the impact of QE unlimited ++™.

    The uptick in E/U is certainly not because anyone’s buying into Euro as the alternate reserve currency, it’s more like seeing which of these 2 bad apples is more rotten right now – and there’s no trigger to create the type of extreme fear (or greed) needed to move the pair. I sense the market is becoming too complacent, which means when the real trigger come we are gonna see some real friggin fireworks.

    I’m still inclined to short for the same reasons you set out, but will keep powder dry for now…particularly given the upcoming ECB rate decision. Most are predicting a cut, but I think there’s a decent chance the ECB will hold – which will prompt another upspurt.

    Ideally, I’d like to build a short core position in the 3230-80 region with a tight stop above. Thoughts?

    1. > Well, around 22 April Danske was targeting 1.33 due to a combination of US QE, YEN QE, market positioning stretched, and fading expectations of EZ tail risk. Goldman agreed but for different reasons, said EZ external balance solid compared to US. JP Morgan initially agreed but changed their minds about a week ago.

      Having seen the price action that has traded since 22 April, you can’t say those bets were a sure thing assuming if you jumped on board!

  4. Sean, I’m curious how much weight do you give to technical (chart) patterns and how much to fundamental factors in choosing your trades. The reasons to be bearish Euro are fundamental, but the charts are bullish.

  5. In ranging markets, technicals get very little weighting, apart from the obvious range edges of course. Ultimately the fundamentals will influence mkt sentiment, which in turn influences positioning so they must be given greater weighting in long run. I’ve never met a rich technical analyst

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