Fading the Euro Optimism

EUR/USD Daily chart looks like stalling at the 55-Day MA at 1.39 just shy of the 61.8% Fibo at 1.40.

It seems like too much effort has been wasted on pulling that stunt so far - 5 days in row tight range and with usd/jpy finally dropping to punish all those easy believers in the BOJ magic + the dissapointment of the EU summit time looks ripe for some reaction.

In addition the 55-Day MA at 106.74 doesn't look like easy beam to hop above.

FX Majors ( € ~ £ ~ ¥ ) ::: Trading the RANGE

Kapri Just entered those positions based on the assumption we are trading in the established range:

Short EUR/USD 1.3782
Short GBP/USD 1.5768
Long USD/JPY 76.88

Risk on a breach & close above yesterday Highs & Lows respectively, so looking to add in that space until the inflection point is not compromised.

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EUR/USD

Daily chart show 1.3850 as a major Resistance level (50% of 1.4555 - 1.3147).

GBP/USD 

Daily chart show 1.5789 as a major Resistance level (38.2% of 1.6627 - 1.5272).

USD/JPY

Yen finally started moving after the extremely tight range congestion in the last 2 weeks.

Yen has appreciated to multi-year highs and MOF/BOJ wouldn't be feeling comfortable with these levels, hence the fear in the market with an FX market intervention. Given that premise the LONG side is favored.

One can use both the 76.30 and 76.78 as SL levels - or one could average till 75 if the price goes that way on the assumption the BOJ will defend those multi year lows in USD/JPY.

EUR/USD & GBP/USD Rally's Resistance Ahead

Market looks very short the contis and that is reflected in those over-extended moves in the EUR/USD and GBP/USD. It might be short covering and stop hunting.


Just as a reference we have solid Resistance areas ahead and majors are very close to these inflection points.


> Resistance layer on EUR/USD is between 1.3836 (July Low) and 1.3855 (50% of 1.4560-1.3149).

> Resistance area on GBP/USD Res at 1.5778 (July Low) and 1.5837 (Upper Bollinger Band).


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Daily ranges are over extended based on historical averages so I'm fading these moves with low leverage.

History repeats itself

If you ever wondered if it is true that History repeats itself, check this out:

On Oct 3, 2008, SPX closed at 1099.23.

On Oct 3, 2011, SPX closed at 1099.23.