EURUSD A Kiss Goodbye Trade underway
EURUSD complex correction just won't end easily. Whenever the pair resumes its downtrend towards the fair value, they come right back to hold it above 1.23.
ECB, EMU, EFSF funding effort in order to subdue the banking crisis in Spain and Greek, caused another round of buying from Commercial and Syndicate buyers in EURUSD and correlated pairs. We have seen increased buy volume since last Friday, however, beginning this week, volume is in decline on the buy side. The sentiment is similar in CME, CBOE volume Put/Call ratio; while long volume still remain strong--this is also indicative in Volume Accumulation on the chart.
Under this scenario, we have a new setup for a strong short on EURUSD, given the pair's bullish sentiment to continue until the ECB rate decision. We have a bearish double zigzag WXY-WXZ correction that is most likely to end 1.29 price area right under the bullish divergence line. Unless there is a breakout above the divergence line, we will be approaching this short as long as the price and wave symmetry stay in line.
EURUSD bullish sentiment should continue until ECB, as it also supported by 200 Day SMA at the 1.2550 price level. This sentiment also represented in our FXE:SPX divergence chart.
Here, $SPX shows strong uptrend while FXE is yet to retrace further up. Another divergence between FXE:SPX should take EURUSD higher before the beginning of the new downtrend.
In the mean time, we will be holding the long from 1.2550 price level with tight stop right below the 200 Day SMA. Profit should be taken on each resistance level until the pair reach to the divergence line; and that's where the 'Kiss Goodbye' trade is expected to trigger.
"When hunting..this cat may take twenty minutes to creep over ground which would be covered in under one minute at a normal walk......
They (lion) wait until a victim comes close and spring up.....This ambush method of hunting uses less energy and has a greater chance of success."
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Comment by fx-Syndicate on July 3, 2012 at 6:28pm -
Oww! Cute cubby--he wouldn't pounce--yet to learn how to :)
Nice animation Lisa.
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Comment by Peter jcp on July 3, 2012 at 6:44pm -
Hi FX Syndicate - love the Lion analogy with the Market Makers / Banks ;-). This week in the UK I think they are all feeling like sheep rather than lions with all the bad news coming out with manipulation on the Libor rate and now even the Bank of England have been bought into the mire.
A few points - as you know I am more short term than trying to forecast the longer term and so for me i am more focusing on whether we get above 1.2630 or go back under 1.2588.
However if I put my longer term hat on the key price to me would be 1.2693 - as that is a LH at present with the high being 2738 and 2820. Until we crack through those 3 prices we will never get to the 2900 area.
Futhermore, we have been OB on the daily's and new weekly although still lots of room on the new monthly - so to go above 2700 is possible and might be then the first real clue.
Going under 2400 completely "blows the game" - so that's not on yet - but teasing down to 2500 is certainly available to get more bears in before stop hunting them.
So in conclusion - other than looking at my scalping levels its down first to 2630+ or the 2580 - prices to work out the next sequence on the agenda for me
Have a great July and keep supplying the great blogs
Regards
Peter
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Comment by fx-Syndicate on July 3, 2012 at 7:17pm
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Thanks for your nice remarks, Peter!
For short term trades, I would stick to the 1.2525 to1.2730 price zone and look for some fib trades until ECB. On this price zone expecting some holiday corrective choppy moves for the next couple of days. The pair must break 1.2730 area, in order for the projected trade to trigger which has a potential of happening on or before the ECB Volatility. While we might show overbought on RSI level, there is still room for further volume accumulation--so I would look for divergence on price chart to the RSI curve and determine any change of trend.
You are absolutely right about under 1.24, 'blows the game' as the correction may not continue for the rest of the summer.
Here is a funny pic from Tumblr since you mentioned Barclays:
Enjoy this pic and Happy 4th of July!
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Comment by UmairButt on July 4, 2012 at 7:31am -
good insight
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Comment by fx-Syndicate on July 4, 2012 at 2:48pm
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Hi UmairButt,,
glad u liked it, hope it helps in ur next trade:)
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Comment by fx-Syndicate on July 4, 2012 at 5:37pm
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Here is another Long signal for EURUSD from 1.25 price area. The 5-0 pattern has a nice symmetry in terms of price and time. So, it can be considered in the next trade while strong risk management should be in place.
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