TheBanker

Trading the Italian Referendum, do we have a major crisis?

Short
FX:EURUSD   Euro / U.S. Dollar
Happy weekend traders, what an end to the year we have on our hands.. as most of you know already I have been screaming parity for some time!

I think that FX markets are not too complacent about the referendum. Italy's complicated politics mean a "No" vote (which is expected) doesn't necessarily follow through to the 5-star movement coming into power. The impact of a "No" would likely have a EUR moderate negative outcome. The Renzi government will likely come under pressure as fears of a fall grow rapidly.

I recommend fading EURUSD allies on a surprise "Yes" vote and selling nearer the 1.08 area. A "No" vote will cause moderate weakness but trading EUR short at these levels is not something I am a fan of.

If the public rejects the reform as expected the euro will come under increased downwar pressure, the cyclical low of 1.0458 from March '15 may will open the gates to a potential test of parity before the year end. Market participants will be concerned that snap elections could be held given the antiestablishment and Eurosceptic performance in national polls.

It would not surprise me if we briefly climb back toward the 1.088 level although upward momentum is unlikely to be sustained for long.

You can see my previous ideas to see my very own euro-scepticism, all european banks are in trouble.. the difference between the U.S and E.U is the reserves on centralised debt. Essentially as Greece goes down, Portugal Italy etc you are talking about undermining the reserves of the European central banking system as a whole. Banks that were not even into derivatives are getting smoked. Leaving everyone with their own debt has really been the achilles heel of the whole EZ.

I have linked my previous eurusd ideas to show that I have been advocating the collapse of the euro since my time here on tradingview.

All the best guys and GL.


** DISCLAIMER: THIS IS MY PERSONAL VIEW AND NOT INVESTMENT ADVICE **

Comment: 1.08298 entry
Comment: congratulations to those who took this, rallies will be sold moving forward
Comment: important weekly close below 1.0556
Comment: on the right path
Comment: weekly close below 1.0465 is needed to deepen the correction
Comment: start covering if you have not already, huge upside in euro has been unlocked! I have changed outlook from neutral to buy

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Comments

Thank you very much my friend!!!
+2 Reply
yu are the best
+1 Reply
TheBanker ali_12345
@ali_12345, thank you for your kind words
Reply
I thinking higher
+1 Reply
TheBanker KathysForex
@KathysForex, thank you for sharing your view :)
Reply
Sab TheBanker
@TheBanker, thanks banker you legend nice pin point entry on eu
Reply
Fully agree :-)
+1 Reply
TheBanker krescht
@krescht, great to hear my friend!
Reply
Cool chart but I believe you got some of the waves wrong possibly... one of the fundamental rules of the Elliott Wave Theory is that "Wave 4 can NEVER cross in the same price area as Wave 1" and that is exactly what happened on your chart lol... explain?
+1 Reply
@VForex, yes you are right in most cases except in diagonal triangles and sometimes in wave 1 or A waves, in most cases there should not be an overlap between wave 1 and A... then again in most cases we do not have a president elect Trump
+1 Reply
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