Eur/Usd Weekly Review: What Is Ahead

By Casey Stubbs– Winners Edge Trading:  Follow Casey on Twitter.

 

Hello Traders I hope you all are having a great weekend.  Welcome to the review of the Eur/Usd pair. I have been studying the Euro Zone and the United States, economies, news, charts and data trying to give me some clues as to what is going to happen next so we can trade it 🙂 After all that research I have just come up with a one word answer: Perspective: The situation in both the United States and Europe can be spinned anyway you want based on your perspective of how you view the news and data. I am actually tired of trying to figure it all out, it is a mess on both sides and I am not going to spend my time making a case for either direction because it doesn’t matter anyways because the market will change its mind as soon as I get it all figured out.

How to get on the right side of the trades:

Ok so now that we know perspective is important we need to figure out the Markets perspective on things, yes I know the market doesn’t think but it responds to how the world is viewing a certain situation. So the market is following the views of the world overall on any given entity that is being traded. In this case the Eur/Usd.  I have been calling a Euro Bounce for the last two weeks in my weekly articles I also state the the media is Fickle in last weeks report. (You can also see the charts I posted there as well.)  What this all means is that the we should follow price and Market Sentiment together.  Here is the Definition of Market Sentiment as defined by investopedia:

The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of securities.

To go back to my main point it means it is the current perspective of the people that are trying to move the markets.  This can change in a hurry, Right now all eyes are on Euro Destructions, but please do not forget that the market has a short memory and can be talking about how bad the U.S. is tomorrow. Especially since the U.S. Debt problem could actually be worse than the one in Europe, and once the sentiment changes, all you will hear is negative news about the Dollar. Now I am not saying it is going to happen it is not a prediction, but rather I would like you to begin to observe how the media flip flops, and how the media reacts to certain things.  The financial media is reactionary and they will focus on what they think is a story, that is why they are always jumping around. They will always try to find the next new thing or the next big thing, and therefore the sentiment is always changing.

Because of this lets train ourselves to look for clues as to how the market changes or how it reacts. Be thinking when hearing news try to think about different angles, try to expand your viewpoints and look at things from different perspectives.

Important: News is a joke to me and I only follow it to determine the current sentiment to help guide me in the direction of the trades I am taking.

Important: Watch Price and support and resistance, see how price reacts and then trade it in combination with the market sentiment. Sometimes it can pay off big time to be ahead of the pack when reversals are coming and sometimes it can hurt you big time because you are trading against the grain.

Current Sentiment Items that might help you in your quest to see which way the tide is turning.

  • More Hints at Qe3 coming our way soon, Very bad for dollar as reported by Forex Crunch.
  • US Debt is in the worst position ever as reported by Bloomberg
  • Bailout Economics do not work as reported by Zero Hedge

Now to the Most important part: To the Charts!

Ok so last week I reported strong support with the weekly charts and boy did that hold up in a big way. We have an extremely strong bullish weekly candle.  I am not going to write out my analysis because the chart I prepared does all the talking.  I am going to lay out a top down analysis for you so you can see exactly how I prepare for the week of trading.

So based on the chart I am very bullish until this weekly bullish candle gets taken out to the downside. That could happen next week I do not know but I know that I am going to follow the current trend.

Take a look at the daily:

 

Now I am going to post two different Hourly Charts for you to look at.

 

One More Hourly Chart:

 

Summary: So that is my take on it, my strategy is going to be to watch those support zones, and look for longs when I see a bullish candle close in the direction of the new trend. I might be dead wrong, there could be earth shattering news to crush those levels. But that is my plan and I am sticking to it this week.  Please share some comments, links, ideas, etc. I want to know what you think? What is your plan, be critical ruthless evaluation is how I have improved myself, it won’t hurt my feelings I promise.

I have worked hard on this article and if you think it is worth anything to anyone please share via Social Media, Thanks.

Some other reading material that might interest you:

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  • Williammealor

    what I would like to say about eu/usd is that china will not want a weak euro as it is now building european airbuses.

  • Fstevens

    Your charts and explanation make everything so clear.  And I can see the ‘channel’ pattern of ups & downs too.  Thank you for sharing your analysis. 

  • walker

    Casey, am waiting for your Forex Catapult strategy to kick in on h4 to the downside, then test support at 1.2650..

  • Rzarney

    Casey,  my  thoughts  are  the  same, take  profits  at  1.3402

    Regards,
    Richard

  • Heat Hill

    After sticking out your neck for the EURUSD pair last week , you are making me a believer in your strategy.  But big fool me I did not follow it.  But from now on, I am going to take your comments on board and  see how it affects my account.  Thanks for your dedication to forex.  Hopefully by the end of the year I should be a little bit OK.
    Cheers HB

  • Lady Rose

    I see the EUR/USD for the next week:

    You must include the EURO with the economy, not only the finances of Europe and the USA. If the EUR falls, gives Europe a competitive advantage in exports to Asia, China, India and the United States. These countries, together with the ECB and the national banks of other countries also increased exports from the euro zone hit dan would intervene. The euro will not fall below 1.25, which is the absolute threshold of pain. The U.S. and China will force Europe to keep the € high, closer to 1.30 to 1.32 Imagine, what would export advantage Germany if the euro falls to 1.20. China and the U.S. would lose 10 to 20% of their exports and have a lot of unemployed. My vision for the next week: EUR / USD between 1.2650 and 1.3150 in wavesGreetings from Germany to the U.S.

    Änderungen rückgängig machen

  • Boltzmann77

    Great article, precise and concise, direct and simple; in reality, it couldnt have come out any better. i appreciate you,keep it up man! 

  • jennie (zjjjj)

    Hi Casey, I have also been analysing EurUsd and glad to say that I have pretty much the same as you, and yes it looks very bullish. You only need to take a look at the Dollor Index to see that this is a Dollar story. Good Luck this week.

  • Adamking1229

      Hector Deviile, This guy really knows the forex market. If he has a sell limit at 132 you should also. Thanks for all the great training Hector. adam.

  • Chris

    There is the saying the trend is your friend. At present we are in a long-term downtrend which has been in place since the summer of 2008. There have been a number of retracements though the high has not yet been broken.The current medium term up trend which has lasted all last week slowed on Friday with only a 46 pip gain. The great question is whether there is going to be a resumption of the downtrend next week or continuation of the uptrend. Personally I think price action must visit parity before it heads to 2.00000. Clearly Greece is insolvent and I am far from convinced that any haircut, however short will resolve anything. Sadly the Greek people must accept a significant reduction in their standard of living or reform with the later unlikely. Portugal despite any excellent bond auction sale is fairly insolvent and it is only a matter of time before they default. Italy will probably pull through though not without a haircut. I do not know what will happen to the strength of the Euro in the event of default. Having said that if there there is default, there will be fewer Euros remaining and thus it would follow that they will be more valuable. The problem will be the loss sustained by the ECB (who own a lot of this debt) which is effectively being underwritten by the solvent states of the Eurozone. Thus I see the Euro heading down towards parity breaking the previous low of 2009 at below 1.9000 as the market takes fright of the Greek and Portuguses insolvency with the Italian haircut. Once the market recovers from the shock it will move towards 2.0000 as the US run their printing presses to keep up with Government spending. It is likely that the Republicans will win the election and the previous Republican was no stranger to spending and increasing Government debt. Thus in answer to the quandary, I do not think the market will break 1.30000 and we will start seeing a move to the downside with the previous low being taken out.

  • Hector

    My views on EUR/USD:

    The recent rally we’ve seen in the last few days is, in my opinion, just some profit takings after the 1500-pip drop we’ve seen over the last 2 or 3 months (who wouldn’t want to cash out on such a straight down-move!), but the overall scheme of things from a fundamental point of view is still very bearish for the Euro-zone.

    Why? Well, America is slowly-but-steadily crawling out of the crisis while Europe is lagging way behind. In fact, other than Germany, the rest of European economies remain totally stagnant. Moreover, the structural problems Europe faces regarding sovereign debt are still unresolved, which forces them to pay a painful premium to auction their bonds. To say nothing about Greece, Ireland, Italy and Spain which are still deep in the hole and looking real bad ahead for 2012. I would not be surprised if Standard & Poors lower their ratings once again in the near future.

    I expect this profit-taking rally to go up around the 1.32 area where we find mid-term resistance from a technical point of view (fibonaccis and previous swing low in the weekly chart), but I bet for a new strong selling pressure coming in play from that level, resuming the ongoing long-term downtrend all the way to 1.20 or even below. At this point, the only long-term support area from a technical point of view is the 1.23-1.25 area (as you pointed in your screenshot), but if that level gives way… well, it’s free fall to God knows where.

    I personally have limit sell orders sitting at 1.32’ish. What can I say, I’m very bearish on the Euro.

    Cheers,
    Hector