Trade The Euro? Here’s Why Tomorrow Is Important
The market took a
breather yesterday after several days of being roughed up. Trading
was very muted though. Action was choppy and moves were more of the grinding
and whippy nature. I had early problems thanks to that punk German teenager
with the Sasser virus. Perhaps in hindsight it was a blessing, I missed no
trades and my computer is now updated in terms of patched and virus software.
Technically, the market still needs to clear a
few overhead resistance areas, mainly being 1094 and 1104. For now, the 200 day
EMA appears to be a topic for another day. On a more critical note, the
bull-trend line from August 2003, which now stands at 1112 will be a very
formidable obstacle. As day traders, this area, if approached, will offer some
good trading opportunities. You will recall a few weeks ago when the 1126 level
(50 day EMA) was in play that we traded very effectively for several days in a
row.
The semis
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)) which had been strong
relative to the market as of late, made a nice move higher yesterday. The SOX
now is back above the 200-day EMA (461). Further resistance lies ahead, 479 and
501, but for now, this is a minor positive.Â
^next^
FX (FOREX):
The FX markets continue to mark time, but if you
drill down in terms of the time frame you trade on, there are some
opportunities, albeit little bites, no big “whales”. The
Dollar Index is wrestling with two key technical levels, 91.56 and
92.09 (thanks Chief for heads up). I was short the EUR/USD
on Monday evening/early Tuesday morning but covered when minor
resistance on the DXC and support on the EUR slowed momentum to a crawl. This
has been the hallmark lately, take what seems reasonable and do not even try to
hang around to try and milk the trade. Everyone from large bank traders to
hedge funds are dancing in and out of trades and there is still some unwinding
going on that adds small knee jerk reactions which typically take away any hard
earned gains.
While this idea goes against my normal trading
posture, the Dollar Index appears a bit toppy (stochastic divergence and Fib
levels) here and the EUR and
GBP are sitting on decent support. I am
looking to scale into some long EUR and GBP trades in anticipation that the
Dollar will give up some of its recent gains. I will have a tight stop in in
the event this does not unfold.
Tomorrow’s release of Euroland GDP (Germany,
Italy & The Netherlands) will certainly offer some insight or a catalyst to the
imminent direction of the EUR. Consensus is 1.2%, 1.3% & 1.9% respectively.
**Â Looks like the release of
the Trade Deficit Numbers were the catalyst to drive the Dollar lower, long EUR/USD
on this development **
As always, feel free to send me your comments and
questions.