On the heels of an Egan
Jones downgrade, the negative outlook on Spain will add to the drama carrying
the euro into this weekend’s Greek elections. The EUR/USD has been rallying
higher towards the 1.2600 level and after exhausting at 1.2609 prices have
slipped back below the major psychological level.
With the elections just days away, it
seems that the short covering in the EUR/USD will be mainly a culprit of the
U.S. dollar’s pullback and the euro capitalizing on this near-term correction
in the greenback.
There’s also a game of chicken being
played as the EU seems to be entertaining the idea of modifying Greek austerity
measure in light of Alexis Tsipras’ goal to repeal the austerity measures. Perfect
timing too since a less cooperative party being elected in to power could be
difficult to deal with; the EU’s already shown all their cards and it’s clear
Merkel and company are still to do what it takes to keep Greece in the euro.
None-the-less, and despite the recent optimism
in the market, the Dow’s weakness today has allowed the U.S. Dollar Index to remain
above 82.00. It’s Important to remember that even as the Dow Jones has
transitioned out of the downtrend, the U.S. dollar has been able to hang onto
its uptrend as the daily is bouncing from a “twelve to two o’clock” Wave angle.
Past performance is not indicative of
future results
The
EUR/USD is at a “common” level which means that the current resistance was once
an area of support. This emphasizes the fact that this area is a decision level
and will likely elicit a reaction from traders. Because of the downtrend, the
expectation is for selling pressure to build.
Past performance is not indicative of
future results
The
near-term trend on the daily EUR/USD is bullish and has formed a short channel.
This move higher is - for now - a correction of the downtrend and this
correction has reached the 34 period EMA low which is a swing short trigger.
The exhaustion and swing trigger comes
at a “stacked” level which means there are multiple reasons that the today’s
EUR/USD high would be viewed as a resistance level. Notice the 1.2600 level,
the 61.6% Fibonacci Retracement, add to that the 34 period EMA low and the
common level all at work in a tight area and there is expectation for
exhaustion when these four factors are considered within the context of a
downtrend.
Past performance is not indicative of
future results
There
may be talk of the historic short interest in the EUR/USD but before taking the
contrarian opinion of “if there are THIS many sellers, we are near a bottom” –
consider that there is a reason that this pair is consumed with pessimism on
scale with the short interest. Certainly short covering on some near-term
profit taking in front of this weekend’s Greek elections should not be
surprising, but uncertain market typically cannot sustain optimism. In fact
many pairs have transitioned from trends into sideways market trends, the
EUR/USD is one of the few market still holding onto a (down) trend.
As an
active forex trader and Chief Currency Analyst for InterbankFX.com I do write
for a number of sites all over the web and I am happy to say that I will be
posting updates atwww.IBFXconnect.com. MyActivity Boardwill feature the trades from my trading account as well as
intraday commentary.
Start the discussion! Questions?
Comments. Leave it here at the Daily Forex Trading Edge for Raghee to
personally answer. Using the icons at the top of the article to forward this
update to a friend via email, post it on Google or Facebook or simply print it
out for reading later.
Forex trading is one of
the riskiest forms of investment available in the financial markets and
suitable for sophisticated individuals and institutions. The possibility exists
that you could sustain a substantial loss of funds and therefore you should not
invest money that you cannot afford to lose.
Posted By:
Raghee Horner
Raghee Horner, chief currency analyst for IBFX, provides her personal daily trading tips and insights through Dailyforextradingedge.com. An experienced trader with over fifteen years in the markets, Raghee is the co-founder of EZ2Trade Software and has taught her brand of technical analysis and charting strategies to students all over the world. She is an international author and has taught currencies, futures, and equities trading for over a decade.
On the heels of an Egan Jones downgrade, the negative outlook on Spain will add to the drama carrying the euro into this weekend’s Greek elections. The EUR/USD has been rallying higher towards the 1.2600 level and after exhausting at 1.2609 prices have slipped back below the major psychological level.
With the elections just days away, it seems that the short covering in the EUR/USD will be mainly a culprit of the U.S. dollar’s pullback and the euro capitalizing on this near-term correction in the greenback.
There’s also a game of chicken being played as the EU seems to be entertaining the idea of modifying Greek austerity measure in light of Alexis Tsipras’ goal to repeal the austerity measures. Perfect timing too since a less cooperative party being elected in to power could be difficult to deal with; the EU’s already shown all their cards and it’s clear Merkel and company are still to do what it takes to keep Greece in the euro.
None-the-less, and despite the recent optimism in the market, the Dow’s weakness today has allowed the U.S. Dollar Index to remain above 82.00. It’s Important to remember that even as the Dow Jones has transitioned out of the downtrend, the U.S. dollar has been able to hang onto its uptrend as the daily is bouncing from a “twelve to two o’clock” Wave angle.
Past performance is not indicative of future results
The EUR/USD is at a “common” level which means that the current resistance was once an area of support. This emphasizes the fact that this area is a decision level and will likely elicit a reaction from traders. Because of the downtrend, the expectation is for selling pressure to build.
Past performance is not indicative of future results
The near-term trend on the daily EUR/USD is bullish and has formed a short channel. This move higher is - for now - a correction of the downtrend and this correction has reached the 34 period EMA low which is a swing short trigger.
The exhaustion and swing trigger comes at a “stacked” level which means there are multiple reasons that the today’s EUR/USD high would be viewed as a resistance level. Notice the 1.2600 level, the 61.6% Fibonacci Retracement, add to that the 34 period EMA low and the common level all at work in a tight area and there is expectation for exhaustion when these four factors are considered within the context of a downtrend.
Past performance is not indicative of future results
There may be talk of the historic short interest in the EUR/USD but before taking the contrarian opinion of “if there are THIS many sellers, we are near a bottom” – consider that there is a reason that this pair is consumed with pessimism on scale with the short interest. Certainly short covering on some near-term profit taking in front of this weekend’s Greek elections should not be surprising, but uncertain market typically cannot sustain optimism. In fact many pairs have transitioned from trends into sideways market trends, the EUR/USD is one of the few market still holding onto a (down) trend.
As an active forex trader and Chief Currency Analyst for InterbankFX.com I do write for a number of sites all over the web and I am happy to say that I will be posting updates at www.IBFXconnect.com. My Activity Board will feature the trades from my trading account as well as intraday commentary.
Start the discussion! Questions? Comments. Leave it here at the Daily Forex Trading Edge for Raghee to personally answer. Using the icons at the top of the article to forward this update to a friend via email, post it on Google or Facebook or simply print it out for reading later.
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Raghee Horner