Political Uncertainty In Greece Shakes Global Markets

The euro and other markets took one on the chin yesterday with the Greek elections bringing uncertainty whether they will hold to the austerity plan or bail on it and their future debt-slavement. This obviously means European and US banks would be on the hook for the bill should they bail with the Eurozone being the obvious first victim.

The key was the statement from the Greek Left Coalition leadery saying the country which started western civilization was about the pull the plug on it as the deal with the EU and IMF was null and void.

This sent markets diving with Gold, Silver and the EUR/USD getting hammered within seconds. Gold lost over $30 within a matter of hours while the EUR/USD dropped about 45pips in less than an hour and the Dow shed almost 100pts in the same time.

The Dow has now lost ground for the 5th day in a row.

Meanwhile, the new French head of state (Hollande) suggested his approach would be centered more on growth and this left people feeling the French may bail on the German partnership they have been working on.

Overall, this should put continual pressure on the EUR/USD which has sold off now for 7 days straight. We advocate selling on any short-covering rallies up to 1.3130 for an eventual move towards the 2012 lows around 1.2650. We will also keep our eyes out for a breakout pullback setup on the next daily close below 1.3000 which has not happened since late Jan. this year. Keep in mind, there is only one piece of reasonable German data tomorrow to lift the pair (German Trade balance) so the excuses well will be running on fumes tomorrow, save Greece doing a 180 and openly embracing the austerity plan.

We do have a light economic calendar tomorrow so any news outside of Greece and France should dominate the airwaves and shot term sentiment.

We would like to ask one question though, which is;
Greece has voted in both neo-Nazi members and old-communist members to its parliament. So in the attempts to fix the situation, save their country and economy, they chose to elect members from two failed systems of governmentt? Who thought of this plan?

Silver – Holds Trendline But Bearish Pressure Remains

Failing to bounce solidly from any reversal signal and hold onto gains, the shiny metal has come under increasing pressure as of late suffering along with gold today giving up a major support level closing below $30. The metal did bounce off a trendline in play since mid-feb. this year but until it can break and hold above the daily 20ema and dynamic resistance, we will look to sell rallies as we do not see any buyers willing to come in till minimally $28.55. Below here, we can see the precious metal possibly returning to the 2011 lows at $26.05 before buyers feel enthusiastic about scooping up silver on the cheap. Until then, we will wait for price action triggers to sell on rallies or until we see a major change in the price action structure medium term. It should be noted since the yearly highs at $37, silver has sold off 30 of the last 50 days or 60% of all the trading days since the end of Feb. till yesterday.