Pls read my JPY view here - JPY view for week AUG/20/2007 , which I prepared 30 min ago. Now lets focus on EUR/USD only :-)
I. Important news from the week:
The discount rate is different from the base interest rate ( 5.25% ), and is used when FED loan money to another bank. This rate cut is significant and important, because lot of banks and funds now will borrow money, and will inject them into stock market. However, for us - currency speculators, this means that:1. JPY rally hard, everything down. Again, see JPY view for week AUG/20/2007.
2. FED decided to cut the Discount Rate by 0.50%. It is now 5.75%.
FED sacrifice the dollar, in order to help the falling stock market.
Is done now. EUR rally about 1 cent imediately after the FED desition (respectively USD index fall). I believe the USD rally is over now.
II. The wedge in USD index:
USD index now heading down, and is 1/4 down the road to bottom (support) line of the wedge.
The target is below 80. Since may then will call "Dollar crash", I do not think this will be that strange, because then we will see a small dollar rally, similar the one from this (last) week.
Before, I wrote following:
For first-time readers, and those who do not know, the wedges are reversal patterns. This wedge is bullish for USD index, no matter what people say for US economy, debt bubble etc. I am sure that at the end of the year, the USD will be lower, but wedge suggest we will have one bounce before that.This is still valid, but probably we will first see USD index down to the support, and then another rise.
III. Wedge in EUR/USD:
EUR/USD 3 days chart:
This chart is like weekly chart. The wedge is clearly seen. Also the raise of EUR is seen. The bottom was about 1.33.62 (or whatever it was 3-4 days ago). We may still see a drop, but I no longer think so after recent FED action.EUR/USD 1 days chart:
Included only to be shown the reversal candle or as I called it Discount rate candle :)
IV. Summary:
EUR began to rise, USD to fall.
Watch what the JPY will do in general, even I do not think it will affect EUR/USD.
But once again don't get overexcited, situation is even more special than last week :-)
Posts
2 comments:
Hi Nikolay, as you pointed in your analysis on 15.08.07, there were significant differences between your view and the one presented by Deltastock's analysts.
Now as their target at 1.3372-60 has been reached and the pair has rebounded to 1.3548, and the support at 1.3450 considered by you as a long-term one,has been tresspassed,canyou give some explanation of the situation, as if you think it is a false-break or smth. else. Shall we think, that the trusted long-term support at 1.3450 is broken or the important level was 1.3360? And can you explain on what ground you have moved the risng weekly trendline, that was projected at 1.3450 in the previouschart, at the new bottom 1.3360?
Greetings
Tony
Hi,
When I prepare my charts I do not use financial software to draw the trendlines. Thats why I can make the line wrong. The trend I before said is 1.3400, actualy is somewhere at 1.33.90. However this target is changed every day, but for sure it *NOT* 1.33.60.
I do not know if you are Bulgarian (so to know who really is Deltastock AD), but Deltastock have proven right lots of times even they give very strange targets. Other times, mostly short term, they were wrong.
What I am worry about is that their target currently is 1.32.62 and possibility to 1.31.44. I do not see this happening unless the wedge is broken (this will happen but not now).
In case you are not a Bulgarian, I do not mind to translate Deltastock today's analysis.
Deltastock analysis
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