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Trade Desk Thoughts
Euro Snap-Shot
| EUR/USD |
Trade Desk Thoughts:
The last week of August trade is upon us, and we are now looking to only trade the long side of the euro, either on new break-outs through the previous session highs, or ideally, trading a pull-back that finds support. The technical reason is that all near-term time-frames just moved long, and the pair is testing as support the top of the near-term 4 hour chart channel at 1.4250. The fundamental reason is that the Euro-zone is one of the strongest areas we have right now in regard to expansionary economic reads (relatively speaking).
We are looking for increasing market-wide volume as Mutual Funds close in on the Oct 31 09 year-end, and create a wave of momentum that may unblock the log-jam of institutional orders. It is fully understood that this pair will only break long and hold if oil and equity trade are both in the green.
Long Break-out: Breaking the high of the previous session and clearing 1.4390 on strong global equity trade
Long Pull-back: Finding support at 1.4250/75 area that holds, and going long from there as each region opens
Short Break-out: Breaking through the low of the previous session at 1.4190 targeting 1.4150
Short Pull-back: Testing the high of the previous session around 1.4400 and failing to hold, on weak equity trade
Fundamentals: We are seeing an increasing flow of positive data coming from the Eur-zone that indicates a period of expansion, but maybe not heavy growth, is sustainable. If so, the interest rate differential, and the lack of forward debt, may make the euro the more bullish side of the EUR/USD pair.
Full Trade Plan detail and examples
Weekly chart trend: Mixed. Main price points: 1.3805, and 1.6036. Looking for: Wave (X) top
On the EUR/USD weekly chart prices fell sharply in the middle of 2008 from the 1.6036 high, down to the 1.3805 area. The price structure of that move was completed with three waves followed by a sharp gain in wave A/1. However, the price structure looks complex as the market may react with another leg down in wave Y if the current prices are trading in wave (X). The possible wave (X) was labeled because of the very choppy and slow price action, which has a personality of another correction from the wave (W) lows to current levels.
If a move through the 1.3805 lows happens then we will be looking for wave (Y) targets, somewhere around 1.1500. However, the next expected step in the current market conditions is a temporary turning point of a recent up-trend, especially if the lower black support line gets broken.
