As we all know the Greek election results could have a big effect on the Eurozone and also what might happen next with the Euro currency.
I have my own view which I don't mind sharing - which I will be attempting to trade - but not probably quite the same way I would do normally.
Lets look at the main facts first - you might disagree but basically this is how I see it in a fairly simplistic way -
1st - Fundamentals.
The theory is the countries currency will adjust against other world currencies according to how economically strong or weak the country is. Bearing in mind we are in a world wide recession majority of all currencies should have weakened - with some a lot more than others.
At the moment in the "ugly contest" - the Euro is a top contender - a bit of botox along with a make over and a massive weight reduction programme - will not change it into a Miss World group overnight.
So conclusion with so much debt and will all members of the Eurozone performing badly - the EU should drop and fall between 500 and 1500 pips to around the early 2001-2004 year levels.?
2nd - Technicals
Without going into massive analysis and saying we are still in a 12 year up cycle - or a 4 year down cycle ;-) - Fact this last 12 months we have dropped over 2400 pips so a down trend - but as we know technically it been oversold on the longer term frames ( monthly and quarterly) and so a 400 to 1200 pip pullback could be expected.
We are currently in a pullback and atm looking at the pair through just "technical blinkers" i would have thought this month of June could have seen easily a 300-500 pip retrace ( remember May was over 900 pip drop).Once you start to get a retrace over 50% on a monthly candle you might expect consolidation and even a change in the trend.
So over say round figures 1.2800 and 1.3000 that might show the start of a change in direction and no more monthly lows in July?.
3rd - Experts View
I have had a look at what the FX Street "experts" are saying with their next weeks forecast - and I am quite surprised. I thought for this next week we would have the "bulls" saying 1.3500 + and the "bears" - under 1.2000.
Instead quite "restrained" - ie low 1.2200 - high 1,3000 areas. - average - around where we are atm.
I think some of the bears are seeing technical reasons for the pullbacks and then maybe look upon further falls from July / August onwards. The bulls are playing safe and probably are viewing 1.2800 - 3300 as being possible and then to review in July - to see whether a more natural range is between - 1.2900 and 1.2500 zone?
4th - Market Makers
I will remain "unemotional" on my comments with regards to these guys - ie the main players - Large Banks - Very large Institutions etc. As an ex businessman who has experienced boardroom meetings with 2 large International Conglomerates, I believe I might know how they operate and the thoughts and plans that may be discussed.
The main goal is of course one objective - making money - ie profit
Do they kill a "golden goose" for a quick "golden lay" - or do they play long term?
Unfortunately some of the Banks guys over the last 15 years - only looked at their own payday and not the future of the business. Think about it if you are very senior in a big player organisation and can retire in 2-5 years - you want the "golden payout" - the quick bucks - forget 20 yrs time - you will not be working at the organisation. That's why we are in this position today - ie the long term was forgotten about. Now that view might have changed -as Banks and money men need some good PR
Conclusion - they want the Euro to survive - its a great money machine - keep it intact. However they can still play;-)
So - they might - and i say might - use this next week as a perfect period to look at "clearing the board" - ie knocking the table over - and running off with the money;-)
I generally think there are more bears in the market on the EU then bulls - so they need up another 200-400 pips to stop all those guys out - and then down 500-1000 pips to get rid of the bulls.
The GU moved over 600 pips on UK Election day - and the the GY - over 1000 pips in a day !!!
Just thinking - an ideal scenario would be a good positive Greek result - to booster up the Euro and then by Wednesday or end of week - some real bad news - to knock all the gains out.
The market makers love double or triple whammies - they only want profit - as that's were they can gain as well.
I believe we should see some large moves - but both ways before we carry on with either an up or down trend. They might not just happen on one day or one session - it might be over a few days or the week - I have a job at times predicting 15 minutes moves and certainly am not into "fortune telling" into really the "unknown"
What ever happens - have a great week - and be careful ;-)