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Posts Tagged ‘eur’

The euro got its bounce

bull24.jpg By the way the euro did get it bounce versus the buck. That means it’s time to buy the EUR/USD if all three of these conditions are met:

1. You consider the pair to be uptrending according to however you’ve decided to define the trend. That could be higher highs/lows, price is above a moving average, a moving average is going up, etc. Pick one and let it be your gauge.

 

eurusd.jpg 2. You got buy signals according to your method. For example, if you are using the Investools workshop study set under Studies, one way of doing this is if the pair is close to getting a green arrow on the MACD and the Stochastics has crooked up.

3. Your posture precludes it. No, I don’t mean you’re slouching in your chair and you can’t reach the mouse! This means you wouldn’t buy the pair if you have a bias against the euro right now for some reason, or are bullish the dollar.

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eurgbp.jpg I’ve fooled around plenty with Bollinger Bands, but they aren’t part of my regular trading routine. Nonetheless, I often poke my nose around what various things are up to, and notice a nice pattern on EUR/GBP.

The trend is up, and the bands have been stair-stepping up. It’s a great pattern, with the bands being at a support/resistance area (I drew my own lines that I felt were a bit more accurate). And it’s a pattern that seems soon due for another step up.

The last 3 times the break in resistance was signaled by a close above the band. There’s a lot of BBands traders who love this kind of stuff. Personally I think the best method would be to use that close above the band accompanied with a buy signal in whatever your method is.

Let’s see where this goes. We’ll try a little experiment with the ol’ bands and see what happens after the next close above the top band. And remember – our saving grace as traders is commitment to a method, or system. It’s understandable if you are still learning what the indicators do. But that should be a short road. The longer road that gets you somewhere is using one of them a lot. You start out not that great with it, but get better and better and that’s where profits lie.

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So much for the EUR/JPY

eurjpy1.jpg Highlighting the importance of entering on the bounce and not guessing it will go lower. Note that now we have an ever nigh (highlighted rectangle) – the downtrend is interrupted until lower highs/lower lows begin again.

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dow.jpg Stocks got a HUGE “denied” today as they failed to overcome former support/now resistance (was the old head and shoulders neckline) and came down forcibly from it. See the green oval on the lefthand chart.

 

 

eurusd-triangle.jpg This is a classic “retest”, having broken out from a technical level. What does it mean for the pairs? In my book it’s a big signal to get frisky again with the yen and franc, and back to be careful/be bearish with the more aggressive currencies such as the euro. Look at how the EUR/USD has come down hard from the resistance we’ve been watching.

This is also a good example of how intermarket analysis can help in currency trading. Disclaimer: if you are starting out, don’t think you have to know all this and do it! You can do fine without. But I’ve found it helpful to me as I’ve adavnced over the years.

dowvolume.jpg Stocks have the bonus of having volume attached to their prices. Rising volume supports price movement, falling volume weakens it. We can put volume on DIA (mirrors the dow, and has volume on it) and see a picture of the bears being strong and the bulls being weak (see chart on left). As we see this unfolding, it helps us feel more bearish and bullish of certain pairs because stocks continue to lead currencies in a lot of ways.

Bottom line: as stocks continue downward, so will most pairs, and the yen and franc will strengthen!

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eurusd1.jpg The recent turmoil we’ve seen in stocks, the fears of recession, then the bounce back … they’ve taken their toll on EUR/USD. The euro, riding a wave of optimism over the economic strength of the eurozone, has stalled. It’s seen in the two peaks the pair made in November and this month: instead of being consecutively higher (= uptrend), they are even.

Not only does that give pause to the uptrend, it is a possible double or triple top, meaning price could reverse much lower. It was just a few weeks ago that we talked of this being one of the “darling” pairs, but my hasn’t it changed … there are much better trends to be had out there right now.

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eurusdtnx.jpg So the EUR/USD super trend has stalled. Will it regain its pace?

It’s in murky waters. The dollar is, without a doubt, weak. Evidence is seen on $TNX – as it falls, 10 years yields (rates) are falling, which hurts the buck. And the buck is already hurting.

In the chart, notice how as EUR/USD rises (USD is falling) $TNX falls. Falling rates/rate prospects coincide with dollar weakness. In the green bars, the two prices diverge and we expect EUR/USD to correct bullishly according to the still dropping $TNX. In the red bar we’d expect EUR/USD to correct bearishly because $TNX was rising – alas, though, it was counter trend and the $TNX up-blip didn’t stick. Beside, at that point euro bullishness dominated.

With $TNX still heading firmly lower, the dollar still has an anchor tied around its ankle. The question is whether the euro can oblige, or if this stock stuff spooks it too much and economic worries make the pair choppy. It wouldn’t be surprising.

If US stock weakness continues (it could continue for a long while), and if EUR/USD stays in a funk, you could participate in USD weakness via USD/CHF. Again, it goes back to following your rules vis a vis the charts, and this economic/fundamentals thinking helps point you in the right direction so you know which charts to focus on, and to see the chart changes coming.

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euraud.jpg Anyone remember how we had looked at some recurring patterns on the CAD/JPY, a few weeks ago? The EUR/AUD is doing it too. Let’s see if we get a repeat performance¬† – although the CAD/JPY got the smack-down today and that run is over. Unsurprisingly the EUR/AUD’s major tops and bottoms align in the same time period as the CAD/JPY’s, but interestingly the commodities (AUD and CAD) are heading opposite directions. Let’s see if the pair bounces back from today’s fall, after it broke out yesterday.

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