Thread: GBP and JPY Pairs H1 2013

Originally Posted by EuroTraderApp

Hi fellow traders,

Having said that, again in my personal opinion, June is an 'edge of the precipice' month which could push the Euro below 1.20. Bulls see the June calendar events as opportunities for politicians to surprise on the upside; I see the alignment of events in June as a rich Molotov cocktail - each one a domino, waiting to be pushed.

Midas

The bull is raging ferociously ahead at 1.2487 now. Is it stoppable?

Originally Posted by root-minus

sold at 1.24720 stop 1.24870 tg 1.24500

stopped


re entry sold at 1.24850 stop 1.25040 tg 1.24500

Root this thing has a 5th and a ab to squeeze out first

Originally Posted by root-minus

stopped


re entry sold at 1.24850 stop 1.25040 tg 1.24500

Originally Posted by root-minus

stopped


re entry sold at 1.24850 stop 1.25040 tg 1.24500

why fight the shorter term trend? go with it............


on a side note, got my limit knocked with some nice pips, should get some resis over here but dont count on a reversal.

if 1.25 breaks we head higher still and i enter long............

Originally Posted by Fx(MIA)

Root this thing has a 5th and a ab to squeeze out first

yes, l see it now


stopped

kind of what i see if we dont break 1.25. some nice diverg on 5 and 1 min.

A break of the read line would mean the pair complete 5 wave on a smaller TF .... This is a 30 Min with Targets

Originally Posted by jogold18

why fight the shorter term trend? go with it............


on a side note, got my limit knocked with some nice pips, should get some resis over here but dont count on a reversal.

if 1.25 breaks we head higher still and i enter long............

I will explain if it goes accordingly..
As of now 2516 on 2 hrs is on the chart... There is a diamond as well which encourages gaisn to 2550 zone..
the lower base of the formation held in nicely.. I cashed in 2 for 100+ pips on euro added (2389_ and cashed 1 SPX at (longed from 1265) 1280.4 as well..
would have been nice if euro printed 2514 for my hedge scalp shorts would have kicked in..
anyways have longs on euro / aud and GBP from Friday as well and still looking to try out some gold longs off 1600-02 with tight stops to see if this can muster its way above 1630 high and well 1642 is formidable resis top of the channel on gold.. 1657 interests me today for been the confirmation of the break higher..was short 1629 from Friday but couldn't hold it for sub 1615 move and well now I'm GOLD-LESS for a short while..

GL..

Originally Posted by ericwong

The bull is raging ferociously ahead at 1.2487 now. Is it stoppable?

Don't worry about this Eric. This is a healthy correction and the Euro is highly likely to head significantly lower given the confluence of events in June. Rajoy of Spain has come out today urging EU members to consider a fiscal union. The market is a little bit excited but a fiscal union (if Germany agrees) will take 6-10 years. The dollar's weakness is driving the current price action (not so much Euro strength) - this is all in the anticipation that some kind of QE3 will be announced.

Stay short.

Originally Posted by EuroTraderApp

[/B] The june Euro calendar (forget the U.S econ calender for a sec) is replete with financial mines and economic pot-holes. June 4th begins the IMF review of Spain's balance sheet, perhaps explaining why Geithner has flown over considering the U.S contributes c. 17% of the IMF's loan book. 6th June - interest rate announcement (a cut could result in further Euro weakness). 7th you got a Spanish bond auction, 10th brings the first round of the French legislative election, 12th you have an ALL important Greece Bills auction (5 days before the elections), 13th you have a new timeline set by Germany ratifying the ESM and fiscal compact....

I could go on...

You left out the June 15th target date for Spain to sell off the small nationalized banks (the regional banks in Catalonia, Valencia, and Galicia; the big Bankia acquisition is an albatross they can't get rid of); it would be a surprising win if they get rid of all three, but if they cannot at least close a deal on the Catalonian bank it is a sign that banking insiders know the situation is much worse than is now public (although not just people in the markets but also people in the streets have been guessing that "there is more than one cockroach in the kitchen" for quite some time). Then of course June 17 is second-round French elections and the replay of the Greek elections, followed by a summit meeting on June 28. Some of the news events have the potential to be "non-disastrous" but there is nothing whatsoever that has the potential to be "good" news (except the summit announcing a comprehensive restructuring of the EU-- yeah, right).

Originally Posted by EuroTraderApp

The point is, you have had 2 major dead-cat-bounces in the last 9 months in the Euro vs. the Dollar. The first one commenced 6th October 2011 and lasted about 3 weeks. It was solely triggered by the ECB's LTRO announcement. That was the jumbo event. The EUR rose from 1.31 to c. 1.41 in a period of 3 weeks. This trade murdered some shorts as the bounce was very swift and pronounced.

It murdered two other things as well: the European economy as a whole, and any possibility that the sovereign debts would ever be repaid. One of the funky statistics I like is the rate-of-change of total external trade, that is Imports PLUS Exports to/from the non-EU countries, which generally has less volatility than the trade deficit/surplus (Imports MINUS Exports) since as one grows or shrinks usually the other is moving in the opposite direction; sheer population growth generally means that this rate-of-change stays positive even in bad economic times but it fell to zero or slightly below in May-June 2011. Not by coincidence, that period marked the explosion of the "indignado" protests in Spain and affiliated protest movements in Greece. These subsided in Spain until the end of 2011 (although in Greece, October marked the heyday of the fad for throwing eggs at politicians) as the euro exchange rate started to fall from the 1.40's halfway to a sustainable level, and the rate-of-change-of-trade went right back up to its usual level: EUR/USD needed to drop 2000 pips and rapidly, but it only got halfway to where it needed to be, and then reversed to go back into the low 1.40's, with the natural consequence that rate-of-change-of-trade turned around also to go negative by December. This was in the face of what should have been a "quantitative easing": the LTRO injected a lot of money into the banking system; however, the Eurocrats then essentially forbade the banks to use any of that money to make loans so that there was no effect on the economy at all, except for the markets bidding the euro back up and crushing enterprises that involved exports outside the continent. The point-of-no-return that passed last fall, without any of the Eurocrats accepting the fact (they still don't seem to get it), is that this was the last chance for any debt restructuring without mass defaults; the ECB or some such institution needed to respond by buying up a lot of sovereign debt, fully understanding that it would have to be written off, but instead there was only a modest amount of debt-paper purchases, which then stopped. The markets, if not the Eurocrats, finally recognized that the euro would have to go way lower, or die, and January saw a 1.22xx rate which would have allowed an economic recovery if it had been sustained.

Originally Posted by EuroTraderApp

However, the 2nd bounce happened over a c. 6 week period between Jan 15th-Feb 28th 2012 and was marred with volatility owing to policy indecision and many political events on both sides of the Atlantic (Mr. Eckert - perhaps you can add some color here as to why the bounce was so volatile).

The political temperature heated back up in Spain as well (along with the "colorful" but not really very meaningful Berlosconi meltdown in Italy), but the worst events were mainly in Greece, which saw protests escalating to rocks and firebombs, while the political parties gave up on the concept of governing, turning over the prime minister's office to an economics professor, poor Lukas Papademos, so that he could take the blame for hard decisions; and there were ups and downs on the question of whether any "austerity" deal should be submitted to a popular referendum, which would have killed it. The final "memorandum of understanding" in March did write off some of the Greek debt, although not enough to make it plausible that the remaining amounts could still be paid off, and in return Greece agreed to deliberately tank its whole economy, which some Germans believe for some unfathomable reason is going to help the chance that the remaining debt gets repaid with the money the Greeks won't have. I wasn't trading during all this, but my buddy was, going long/short/long/short on EUR/JPY (he never trusts EUR/USD) and asking me for advice all the time (all I could tell him was that, from my understanding of things, there was no rational reason for the euro ever to go up). I entered the game in mid-March, when I thought the foolishness was over and that the euro would return to its January levels: I shorted, and got massacred, just as the March-April rally took hold. I was baffled as to who could possibly be buying euros in huge quantities in mid-March: it turned out that the European Banking Agency was forcing banks to offload risky assets from their balance sheets, which were being bought up by banks from elsewhere (principally Asia) with severe forex consequences. Another point-of-no-return passed, again without the Eurocrats understanding or accepting it: the eurozone as it is now operated, with institutions under treaty mandate to maintain hawkish policies regardless of economic conditions, cannot possibly survive; either the treaties must be massively redrafted, or the southern economies have to exit the euro quickly, or-- the economic depression will accelerate until political violence forces a breakup of the whole EU. I would not have believed until recently that the last option was the most likely one, but the policies remain suicidal.

Originally Posted by EuroTraderApp

it is my personal view that if we get a bounce, it is likely to be similar to the Jan-Feb 2012 one; only given the sharp deterioration in economic conditions now (vs. in Q1 2012), the magnitude of the bounce may be more limited, however. Perhaps 1.25-1.27.

Having said that, again in my personal opinion, June is an 'edge of the precipice' month which could push the Euro below 1.20.

My rate-of-change-of-trade stat did manage to climb up from its unusual negative level at the end of 2011 to an almost normal level by the end of 1st quarter, but may now be back to zero or below. The continued strong euro is fatal: projections (by Bloomberg some weeks back; I don't of course trust any projections from Brussels) that the EU economy would turn around from a contraction through the end of 2012 to a mild positive rate of growth in 2013 depended on the assumption that the exchange rate would get down to ~1.22 fairly quickly and stay there; every day that that doesn't happen means that businesses cannot plan rationally. At this point I no longer believe that ~1.22 is low enough; it has to go below 1.20 in order for there to be confidence that it won't bounce way back up again. But as I keep seeing, the mere fact that the euro OUGHT TO go way down is no guarantee at all that it WILL.

A month or so ago, somebody posted a link that the psychology of the most successful traders has uncomfortable similarities to the "psychopath" profile. Part of my problem has been that I have never been able to fully set aside the realization that the markets I am watching represent the economic fates of hundreds of millions of people. This current bounce means I am thousands of dollars in the red, and that of course hurts; but it also means that the chances are rising every day that the end of this story will be a return to 1930's conditions in Europe, with economic collapse leading to increasing political violence. There are some more points-of-no-return coming up this summer.

Hello Traders,

Though Monday's docket was light in regards to economic announcements, the calendar will heat up with three central bank interest rate announcements and a Spanish bond auction this week.

These events usually create some market volatility so trade carefully. UK Diamond Jubilee holiday reducing trading volumes so moves have been exaggerated.

For a more detailed calendar that includes medium and low priority announcements click the following link:

Economic Calendar | DailyFX Forex Events Calendar | DailyFX

Also watch the DailyFX Team coverage of these market moving events:
Trade the News Live | Forex Trading Analysis | DailyFX

30 min looks like it wants to roll over for the short term.
think will get a move lower 1.2455?

if we have a "clear" break up, it could unleash another bull run to daily S3.........

Originally Posted by EuroTraderApp

Don't worry about this Eric. This is a healthy correction and the Euro is highly likely to head significantly lower given the confluence of events in June. Rajoy of Spain has come out today urging EU members to consider a fiscal union. The market is a little bit excited but a fiscal union (if Germany agrees) will take 6-10 years. The dollar's weakness is driving the current price action (not so much Euro strength) - this is all in the anticipation that some kind of QE3 will be announced.

Stay short.

It's Seniors like you that give green horns like me the confidence to gain invaluable experience in this trade. Really appreciate it and thanks so much.

Originally Posted by jogold18

30 min looks like it wants to roll over for the short term.
think will get a move lower 1.2455?

if we have a "clear" break up, it could unleash another bull run to daily S3.........

Hey jogold, I am thinking the Euro could roll over as well as the 1.2500 whole number/round number resistance at R1 Daily Pivot standing in way of Euro rally

I like this resistance in H4 from 1,3250 highs. I have a sell position with an aggressive risk-reward. Now the currency tests 4Hour-EMA50, the resistance, R1 and 1Hour-EMA200.