Euro is Going to Bounce Soon, Despite What Everybody is Saying.

By – Casey Stubbs

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We have started the year of with nothing but consistent drops for the Euro verses all major currencies. The current market sentiment is nothing but negative news.  The constant stream of bad news is going to continue to drive prices lower on the Euro.  Equally important is the string of positive news coming out recently on the Dollar.

There was recent negative biased opinion on the Euro put out by Chief economist Olivier Blanchard.  He believes the Euro will be continue to be in a recession.  So based on that opinion we can expect to see more downside in the Euro in the near term.

Get a detailed report on the Eur/Usd from Forex Abode.

Caution!!!

However I personally see a strong potential reversal based on the following things:

  • The Federal Reserve still wants to devalue the Dollar and is looking to proceed with QE3 the consequences of that will be a large devaluation of the Dollar.
  • With all the shorts in play right now it is only a matter of time for a massive short squeeze to come into play.
  • Goldmans’ talking Head makes a bearish Euro statement which usually leads to a reversal as reported by Zero Hedge.
  • Commitment of Traders Report for the Eur/Usd hits a record for the most shorts held at one time. If everyone is short than there will be less additional selling pressure.

So in the time being I would play this market by shorting all large pull backs in high resistance areas. But do so with caution and great risk management because as I mentioned a short squeeze could come into play.

Lets take a look at the Chart:

 

Eur/Usd Daily

Click on Chart to Enlarge

Thanks for reading and please share your comments and spread this article around to your friends.

Additional Article on the Dollar Index.

 

 

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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  • Kuulcatt

    Well spotted, keep it up.

  • L Arun Singh

    I remember this blog…actually i was searching for it..

  • Fanie

    The EUR will come back yes but because of a fast falling USD due to a very sharp increase in crude oil to historical high levels very soon. (US150+/barrel)

  • Damon Hunt

    Nice to see that consensus is still that it needs to bounce up… down we go! 

    Leading indicators say down, lagging indies need to relax a bit but we still have some massive targets down, and lots of time left in the wave count. As for the crowd; when my neighbor who knows nothing about trading (or CNN) says that I need to sell the Euro because the end is near, we will be at a bottom or very close, Time magazine is still warning about maybes… that is not good enough we need the media to start the panic of dumb money (newbies and hedge funds). We are not there yet, the smart money does not have buys yet and the dumb money and dumber money (massive hedge funds) have not been caught in any squeeze(s) at the bottom yet, it is very safe to say we are going down at minimum to 1.2000 (If truncated). By first week of Feb.  I’ll see you down there. 

    You (VSA trader) on the other hand, know your $hi#   That is very rare.

    (Forex Disclaimer: That being said I can afford to be wrong with my risk reward ratios, anyone reading this: don’t be a douch.)

  • Kristina1986martinsson

    Short sellning and short holding of eu currency

    Brittish government,not in eu zone, is against some measures from eu authorities

    I would not to be in that room, bloody fight

  • Phil,

    Thanks for the useful information, I wish you the best.

  • Because I am not so foolish as to run in front of a Freight Train 🙂

  • Options321

    You may be right but don’t forget to place your stop loss.

  • Rblaz18

    If you think the EUR/USD is going to bounce soon, as per your title, why don’t you go long & buy it & not say to continue shorting on bounces..

  • finn

    very useful

  • philby

    Pretty sure there’ll be some hefty Option Strikes up at around 1.3 next week that’ll most likely get hunted. Might be a good place to go short if it gets up there, could well be some EUR positive news / chatter too. Pretty sure Somebody Big bought a lot of them at around 1.27 after NFP to keep it at around that level.

  • philby

    Might well see a bounce in EUR / GBP too though – looking pretty Oversold there.

  • Tony, Say it aint so, Please dont be like that my friend. The truth is that the market will move as it wills and we must adapt or else we will not survive. If we try to control the market based on our feelings than we will get burned.

    Thanks

    Casey

  • Trgroot

    I would not pass this on to my enemies considering my past experience with your products and your attitude. I have lost enough to say you little creditability left
    TG

  • Brian,

    Thanks for the comment, and yes Money Management is important. Dont Trade on opinions or hope it is a complete waste of time. I wish you a great new year and can’t wait to see what you are up to and I plan on being a part of it.

    Casey

  • Frank

    Hi Casey,

    I agree with you on your opinion on the Euro. At 1,26 we definitely will see a bounce. However, I would in a case like that rather go long in the GBP/USD which has so far been stronger than the Euro.

  • Brian

    Great article Casey.  Thanks for your insight!  Seems that everyone is calling “Short” right now and when that happens it is about time for a reversal.  Best take away from the article is to stick good money management and not be blinded by what we “hope” will happen.  The technicals will tell us where the market is heading as long as we listen.

  • 73kane

    Contranion view escape from the herd 🙂
    Rally on the cards for the next few months then the big fall.
    trade what you see and not what you heard.

  • Grn_side_up

    I believe this is some good advice Casey. If we do get a decent bounce I’m looking for it to go to the 1.2500 area.  I’m going to be especially mindful of the Daily channel it’s riding in.

    Rusty

  • Jspider

    Thanks for the article. Good to see a contraian position. IMHO for the near future the support area will not hold. However, that being said, I believe you are correct in predicting a bounce. The bankers cannot afford a steady drop. They need bounces and pull backs to make money and soften any loosing positions they may have.
    jspider

  • Rzarney

    Heads  up  article, thank you

  • Erwin

    I mean, that  the EUR go up next week. China and the Tigerstaates c’nt accept the EUR down for the export. Germany and the rest of EU have a very well more Export if the EUR go down. The China, India and the US will too, that the EUR go up….

    EUR 2001 by 1,18 USD, now by 1,27, the highest are 1,52 this is 20% down to 1,27

    Greetings from Germany

    Thank you very much, for your good informations all days over winnersedgetrading  

  • Vlad

    I agree, also   Weekly chart suggests a reversal.
    Thanks