As things currently stand, you can only think that there are some awfully flighty traders out there. I personally bought a couple of puts when I saw the hover. The Euro moved from 1.595 to the dollar, to 1.571 in the space of an hour in what Pythagoruz likes to call "a fast move from a failed move". The Euro was hovering at record levels but failed to push past the round numbered psychological barrier of 1.60 to the US Dollar.
In my opinion, without intervention, that barrier will tumble. It's just a matter of time and our favorite chart, the FXE 2 year weekly, with PSAR may be pointing out when that move will come. Let's take a look, and you can click on the chart for a larger image.
The PSAR, or Parabolic Stop and Reverse on this chart has been the most consistent indicator I have seen in a long time. When that meets the stock from the bottom side, you have a buy signal on your hands that hasn't failed in over two years. That isn't what the PSAR was originally intended for, but it's working here.
Based on this chart, I believe we'll trade around this range until the PSAR catches up to FXE. Barring any intervention by the central banks and the ECB in particular, that should be the start of the next leg up, beyond 1.60 US Dollars to the Euro. I'll be waiting for it.
Disclosure: I have no speculative foreign exchange position, at this time.
5 comments:
Hey indi, nice chart there. I think you're right that the euro is done making new highs for a bit and even looks due for a pullback. Three of the last five weeks were distribution weeks (down on good volume that was higher than the week before) and those candles just look like a short term top to me. Plus its stretched pretty far from that 50 dma.
I would expect FXE to pullback to 150 before continuing higher. In the least I'd wait for that PSAR to meet the price before going long for a short term trade. Its really uncanny how well that indicator works with this currency.
Cheers
I'll be watching those "distribution" weeks for volume too. A drop in volume would indicate exhausted sellers.
The date to buy Euros is probably a month away, based on the rising PSAR and 50dma/40wma.
Now this is funny.
http://seekingalpha.com/article/73019-the-treasury-fed-and-bankers-are-setting-the-bull-traps
Bill Cara has found the trade too.
"What this situation has done is to push me into day-trading forex..."
New highs for FXE, incredible.
I still think the Euro will retreat from these levels.
But, I still have no speculative position in the Euro.
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