The
most popular question I have received over the weekend is easily: “What is the euro
going to do next week?” Traders don’t predict however forecasting potential
events is part of the job. So let’s look at some possible scenarios.
Fundamentally and I should say from my viewpoint the psychology surrounding
the fundamentals are firmly negative and the tone of the entire Eurozone (EZ)
crisis has shifted politically. I think first and foremost German Chancellor
Angela Merkel has lost a lot of support and the German people are fed up with
paying the bill for Greece. This along with the fact that the recent German
court ruling has made it more difficult for further bailout money from German
to flow makes the entire recovery in Europe shakier than ever. By the way, this
all accompanies a breakdown through 1.4000 in the EUR/USD that has momentum as
the Dow Jones continues to sink and the U.S. Dollar Index has found the rocket
boosters it needed to travel higher through 77.00.
A Greek default is steadily being discounted into the market and
this accounts for the consistent push lower in the EUR/USD and in the EUR/JPY -
which touched 103.88 today. It’s also important to note that this low breaks
through the weekly support that was at 105.41. Look for this level to be
resistance as prices bounce higher through 105.00. In fact look at the 23.6%
Fibonacci Retracement of the last major sell-off on the daily chart. It shows
selling pressure to extend higher to 105.77 which is the in the area of the
recent highs and the close for September 9.
Past
performance is not indicative of future results
The daily EUR/JPY is bouncing from
today’s lows which did break the weekly horizontal support at 105.77. This correction
could carry the pair to 105.77 where selling pressure is likely to be waiting.
When looking at the EUR/JPY remember that the yen’s strength
however is being exacerbated by the franc no longer being the safe haven it was
before the 1.20 EUR/CHF peg.
My view of the EUR/CHF is that the Swiss National Bank (SNB) will
continue to do what’s necessary to support the 1.20 00 level or at very least continue
to give the impression that it will. The
pair will probably find a trading range between 1.2000 and the 200 period SMA
close resistance.
Past
performance is not indicative of future results
The daily EUR/CHF reflects the
continued support above 1.2000 as the SNB has made it clear that this level
will be vigorously support.
The EUR/USD - while certainly bearish and confirming a completed
transition to a mark down trend - is probably due for correction of the recent
slide lower. A rally to a shallow correction should be considered. There will
be plenty of selling pressure on the pair as long as the dollar remains strong
and the Dow continues to struggle below 11,000. The 240-minute EUR/USD
continues to move lower at a “four to six o’clock” 34EMA Wave angle and this
sets up what could be another round of swing shorts at the area between the 20
period SMA and the 34 period EMA low.
Past
performance is not indicative of future results
A swing short is waiting for (patient)
EUR/USD bears as the pair could correct higher after its rapid decline. Look
for the 1.3800 level to help solidify selling pressure on a rally higher. The
swing entry short would capitalize on the bearish Directional Bias of the overall
(daily) 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.
Online currency 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 Interbank FX, 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.
The most popular question I have received over the weekend is easily: “What is the euro going to do next week?” Traders don’t predict however forecasting potential events is part of the job. So let’s look at some possible scenarios.
Fundamentally and I should say from my viewpoint the psychology surrounding the fundamentals are firmly negative and the tone of the entire Eurozone (EZ) crisis has shifted politically. I think first and foremost German Chancellor Angela Merkel has lost a lot of support and the German people are fed up with paying the bill for Greece. This along with the fact that the recent German court ruling has made it more difficult for further bailout money from German to flow makes the entire recovery in Europe shakier than ever. By the way, this all accompanies a breakdown through 1.4000 in the EUR/USD that has momentum as the Dow Jones continues to sink and the U.S. Dollar Index has found the rocket boosters it needed to travel higher through 77.00.
A Greek default is steadily being discounted into the market and this accounts for the consistent push lower in the EUR/USD and in the EUR/JPY - which touched 103.88 today. It’s also important to note that this low breaks through the weekly support that was at 105.41. Look for this level to be resistance as prices bounce higher through 105.00. In fact look at the 23.6% Fibonacci Retracement of the last major sell-off on the daily chart. It shows selling pressure to extend higher to 105.77 which is the in the area of the recent highs and the close for September 9.
Past performance is not indicative of future results
The daily EUR/JPY is bouncing from today’s lows which did break the weekly horizontal support at 105.77. This correction could carry the pair to 105.77 where selling pressure is likely to be waiting.
When looking at the EUR/JPY remember that the yen’s strength however is being exacerbated by the franc no longer being the safe haven it was before the 1.20 EUR/CHF peg.
My view of the EUR/CHF is that the Swiss National Bank (SNB) will continue to do what’s necessary to support the 1.20 00 level or at very least continue to give the impression that it will. The pair will probably find a trading range between 1.2000 and the 200 period SMA close resistance.
Past performance is not indicative of future results
The daily EUR/CHF reflects the continued support above 1.2000 as the SNB has made it clear that this level will be vigorously support.
The EUR/USD - while certainly bearish and confirming a completed transition to a mark down trend - is probably due for correction of the recent slide lower. A rally to a shallow correction should be considered. There will be plenty of selling pressure on the pair as long as the dollar remains strong and the Dow continues to struggle below 11,000. The 240-minute EUR/USD continues to move lower at a “four to six o’clock” 34EMA Wave angle and this sets up what could be another round of swing shorts at the area between the 20 period SMA and the 34 period EMA low.
Past performance is not indicative of future results
A swing short is waiting for (patient) EUR/USD bears as the pair could correct higher after its rapid decline. Look for the 1.3800 level to help solidify selling pressure on a rally higher. The swing entry short would capitalize on the bearish Directional Bias of the overall (daily) 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.
Online currency 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