SPYderCrusher

EURO Decline -- Is it over? NO! No Evidence of Bottom Yet

FX:EURUSD   Euro Fx/U.S. Dollar
This chart shows EUR/USD             , the Euro             Currency, on a Weekly timeframe . (NOTE: Updated chart below, accidentally clicked off the Dynamic Levels that were supposed to be in the above chart)

Plotted on the chart is SCMR             Trends™, which sequences price to find the correct behavior and identify good setups. It is available (along with other indicators in the package) in the TradingView Marketplace App store.

The point of this post is to state that on the larger timeframe, the Euro             has provided zero evidence that it is done trending down. No -- it is not yet reversing.

This is a relevant observation because the conventional wisdom is that the price is oversold -- and yes, it certainly is -- but that currently there is no actual evidence of reversal, so to bet on a longer term reversal here and now is not the right move. We would need more data from the market that suggests a reversal is actually underway (such a Blue unconfirmed reversal or an "O" plotting under price, a confirmed reversal). This may come to pass sooner than I expect, but the important thing is that it's not happening now.

Looking in the past, the Euro             was in an uptrend and provided several good signals from confirmed reversals up ("O" under price) and the Pivot bars ("P" above price). Today though, all we see is red (a downtrend).

My take is that the market can trend lower for several more weeks before a true low (which is still theoretical at this point).

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Let's look briefly at the economic and fundamental reasons for this move.

1.) EU recession. Recent data from the ECB shows that Eurozone has negative growth. The ECB is not allowed to print -- only issue bonds -- so there is a *huge* cost incentive to weaken the Euro             to boost demand for these bonds, especially if they are settled in dollars.

2.) The other side of the coin is that a weaker currency can help boost foreign investment, which adds demand to a stagnating economy.

Both of these reasons, structurally and politically are why I believe the strong Dollar and weak Euro             can persist longer than many expect.

RISKS:

1.) Perhaps the ECB will change its tune. I doubt this
4.) Not a recommendation to buy or sell, just an example the ways in which you can combine structural fundamental analysis with price action, which while oversold, is not yet actually indicating a reversal (even if only temporarily).

Imagine yourself objectively analyzing markets, visualizing risk & enhancing the timing of trades.

SCMR Trends™ is TradingView's most popular add-on software for a reason.

--> www.tradingview.com/market/sc-spydercrusher

Disclaimer: goo.gl/RsfTKX
I realized that I accidentally must have clicked off the Dynamic Levels™. Here they are.

You can see the most recent Supply Level is ~1.277 and ~1.30

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Hi , SCMR Trends where ?
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SPYderCrusher PRO ersoytoptas
2 years ago
Hello Ersotoptas, if you go to the Market Place Add-on section, it is called "Analysis Suite - SCMR Suite". You can find the marketplace add on by hitting "/" when you have a chart open and looking on the left margin under "Market Place Add-Ons"
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Wanted to update this with a daily chart that is now showing some signs of life.... daily chart is a confirmed reversal now.

The difference between the original note and this updates note is that now we have evidence of an actual bounce, whereas before we did not.

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SPYderCrusher PRO SPYderCrusher
2 years ago
should add original is weekly chart...the daily chart is subordinate. So it depends on timeframe. On the daily can bounce now...will this be enough to ultimately change the weekly trend? that we will need more time to see. But before there was no indication, now we have daily up, weekly down, aka an improvement over the prior picture.
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SPYderCrusher PRO SPYderCrusher
2 years ago
to update this DAILY chart, it looks the reversal is going to fail. We are getting a X, which means "warning, reversal is likely to fail" so the way to treat this is to effectively move the stop up to underneath the X bar low. This way if the trade recovers, great, but if not, we have cut our initial risk by ~40%.

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SPYderCrusher PRO SPYderCrusher
2 years ago
On the weekly, (original post was regarding the weekly trend) can still see no change in trend, that prices are trending down

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SPYderCrusher PRO SPYderCrusher
2 years ago
to continue the update, following the X bar we moved the stop up, and the market started to bounce. We had a Z bar, which is a sign that most likely the new stop of the X bar low is a good one. At that point, can either move stop up to Z bar low, or keep the original modified X bar stop. Both were stopped out, as the market continued in the more dominant weekly bearish trend.

Typically since this is a weekly chart (the OP) I would bother with a daily update since the weekly is the focus, but in this case I thought it made sense to show how the market was attempting to reverse on the less dominant timeframe. As suggested in the OP, the fundamental components of the reason the Euro is going lower are still very much in play, and recent news from Draghi and the ECB confirms this.

lower
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SPYderCrusher PRO SPYderCrusher
2 years ago
To update my updates, we can see that weekly prices have moved to a new low.

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The weekly trend never changed from lower, and the powerful macroeconomic forces at play in the Eurozone still remain in effect.

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SPYderCrusher PRO SPYderCrusher
2 years ago
so it has been 1 month from original post, and now weekly Euro is showing a *blue* candle, signifying an UNconfirmed reversal. This is the closest the weekly has come to actually signaling the potential to bounce on the weekly timeframe since mid-May.

It will need followthrough to confirm the reversal, but getting closer!

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On the flip side, USD weekly is still green and bullish, and you can see targets below upon a retrace.

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We had a lot of members trying to catch the falling knife. Most were EWT or harmonic pattern followers.

Like following your system.
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SPYderCrusher PRO QuantitativeExhaustion
2 years ago
Thank you, appreciate the kind words.

Yeah, it is tough to jump in front of a trend this strong, especially given that as of yet there is still no real sign of an inflection point. I am a trend trader at heart -- don't fight the fed (ecb) and don't fight the trend!
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QuantitativeExhaustion PRO SPYderCrusher
2 years ago
Agree
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Update, 12-17:

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Euro Continues to get smashed, reference above for why:

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UPDATE: 2/3/15 --- still no weekly reversal yet

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