Recently, the EZ fundamentals have been weighed down by Europe's second largest economy, when today France posted economic data bringing deflationary pressures to the forefront. What's worth reframing here, is that this week's significant decline in the EURUSD Forex leader occurred in spite of Germany's positive data - First question that comes to mind is whether the peripheral bears could potentially break Germany's back. Furthermore, when compared against economic data signaling a potential recovery - however serious or manipulated they might be - from across the US, a second question is whether this potential USD would be sufficient to ignite a market-wide run out of the EUR currency.
ECB Vice-President Vitor Constancio stated this past Thursday that the Eurozone was sitting in a "creditless recovery" with very low but that moderate growth would likely result from the broader recovery gaining traction in the currency area, adding:
"We have therefore reaffirmed our forward guidance and stressed that we are determined to act swiftly if required and do not rule out further easing."
- Could this be any more telegraphic?
How about his following statement, then:
"he again noted that next month's ECB Staff forecasts for medium-term would be the main criteria for any interest rate decision by the Governing Council when it meets in Frankfurt on June 5."
- I'm willing to wait, but for now, let's look quickly at the technicals.
The chart highlights a very relevant technical event, which is that of a completion in two separate granular scales, with Point-5's lining up precisely at the same time. The particular nature of is that it points to a TP zone along its 1-4 Line. I thought it interesting that the respective profit-taking lines crossed on Bastille Day, on July 14th, 2015 - Next year.
PROP PATTERN & PREDICTIVE/FORECASTING MODEL CONVERGENCE:
A prop pattern I own completed right at 1.38319. Here too, I found it interesting that it lined up closely to TG-1 = 1.38690, based on a prop model that I use in my predictive analysis and forecasting. This is the model that I have used to successfully define a reversal top and define targets - See charts under my profile for reference.
Taken as a whole, the tone of the model is neutral to , whereas the patterns are pointing to a degradation of the pair. But, in closing, here is what ECB Weidmann said this week:
"Moreover, the real effective exchange rate of the euro is approximately where it was also at the start of Monetary Union."
- Does he mean back down to 0.89000?
Predictive Analysis & Forecasting
Alias: 4xForecaster (Twitter, LinkedIn, StockTwits)
Signal Service or Private Course - Contact: MarketPredictiveAnalysis@gmail.com
All updates on https://twitter.com/4xForecaster
The hammer is significant is it reinforces the net market reticent sentiment to roll this Forex leader down - If you play the patterns, you would see that the completion of two Wolves at two separate scales, as well as a potential EAGLE's strat relative to the nascent Shark (i.e.: Shark Aggressive C, or "SAC") are potential short plays in the background.
This reluctance expressed in the candle should also point to a potential squeeze development IF and WHEN price do roll down further. In this case, then an acceleration to the downside could justify the speculative crossing of both WW's TP lines.
A quick tech-note and commentary:
1 - The "Bastille Day 50% Retracement" is in reference to Scott Carney's 5-0 pattern, which naturally follows a Shark completion, as indeed, the nascent background pattern is a Bullish Shark - You will see that a 50% recovery would bring price to a significant historical R/S level, but this is wildly speculative at such infancy stage:
Here is another chart I posted about a month ago, highlighting the technical resistance - - Click on TradingView's fantastic replay button ... Not much of a rally happening here.
2 - The TECHNICAL condition I would be waiting for is the breach of the smaller pattern's support, followed by a relief rally against the underbelly of that support-turned-resistance line, before considering any shorting action.
Feel free to follow me on Twitter, alias @4xForecaster. All all bounces back into TradingView, my new habitat, where all the sticks and stones are gathered up for all of my predictive analyses and forecasts methodology.
- From Twitter:
"$EURUSD closed the week on a suspenseful 2-4 Line likely rescued by low US yields. Bears prevail - @tradingview"
"$EURUSD Midday Update: A major move below 2-4 Line validates bearish "Bastille Day" forecast scenario - @tradingview"
While the move in the arrow emphasizes the directional bias, it is not meant to define a time-based forecast. The "Bastille Day" event that is projected to define an abysmal value ob July 14th, 2015 (a little over a year from now), is coincidentally the product of my prop predictive/forecasting model.
- Still, bears are coming in force, shouting: "Aux armes, citoyens!"
Following are examples of forecasts I made which produced lots of incredulous comments and sometimes insults:
1 - UK 100: After hitting 6802 forecast, I gave an abysmal 6419 target among three others ... I hit all four targets:
Quickly, here are other ones among many others that caused similar comments:
1 - EURCHF = 130 pips
2 - USDCHF = 142 pips:
3 - EURUSD = 174 pips
4 - NZDJPY = 339 pips
5 - AUDUSD ... 643 pips!
There are many more, but most important, the distance from the current price level to the forecast level that got reached eventually is not what matters. What matters is that our thinking process inherently forbids us to fathom the possibility of "excessive" gains. So, instead, we assign a negative connotation to it.
Best is to have a system that you trust, then plan the trade through it, and finally trade the plan.
Distance is time, and we interdict ourselves to "lose" it. Nothing really takes or loses time. We merely have to give it, as in "give it time". It's amazing how closer and sooner things get without minding it.
You always make my day better ever better. Please include me to that link at 6 -- EURUSD ^_^
$EURUSD right at long-term support: Make or break |
$EUR $USD #ECB #EURO #forex