EUR/USD view for week DEC/10/2007

I. Important news from the week:

1. Gold still correcting (~$800)

2. Market decline

3. Currency debase began - Canada cut rate, UK cut rate

4. Crude still correcting ~$89 - they are joking, it must go higher very soon.

5. Paulson create a Subprime bailout plan - they will help selected people. This it is very dubious and can bring strange reaction from the people who will not be helped, I will not discuss it here, but for sure will write article in http://www.novini.net/ (in Bulgarian)

II. As I wrote before:

FED blew it!!! They totally destroyed the dollar in long term. I think they will inflate now, and stock market will go higher and higher, but only in nominal terms.


III. The parallel uptrend (old wedge):

EUR/USD 4 day chart:

Blue channel up. May be broken on upside, but then price went back into the channel.
Is interesting the second blue line - it is broken too.

EUR/USD 1 day chart:
Brown line is wedge support (see 4 days chart). Blue lines formed an uptrend channel. Unfortunately, this channel is definitely broken last week. Friday price raise, and currently testing blue channel as resistance.

Last week I described two scenarios. Now I believe we have bearish scenario with target 1.42.

EUR/USD 4 hours chart:
Here is EUR/USD 4h. Blue channel is uptrend from previous chart. Pink is the downtrend. Currently the price testing blue channel (now resistance)

IV. FED meeting speculation

I believe the EUR/USD is no trade at the moment. Only good possibility to make money is the FED meeting.

There are 3 scenarios:

1. They DO NOT cut rate - bullish for the USD.
2. They cut 0.25% - bullish for EUR.
3. They cut 0.50% - even more bullish for EUR.

Which one will be?
I think there must be a cut because the other central banks cutting.
Anyway we can wait for the news and to trade the spike.
I will post update for this later in the coming week.


No chart, but we still have huge H&S formation. Target is under 200.

Currently GBP is no trade.

VI. Summary:

I can say absolutely the same as previous week:

No trade recommendations this week.

Remember EUR is just a worthless paper as the USD is. Eurozone has own problems too. The only reason EUR go up against the USD is because Eurozone and ECB do not inflate as much as FED. Or may be they do now. Who knows. The inflation we see now, is actually from money supply increased 6 mo ago. So we do not know if ECB printing money or not.

As we saw Canada cut their rate, hoping CAD to be debased against USD.
UK cut rates too, because guess what? - They have subprime problem too. This rate cut will debase their currency too.

There is only one real currency and is called GOLD. As you can see, gold rising against all currencies, not only against the USD. This may mean only one thing - inflation rising. Actually some people believes gold is bubble, but this is wrong opinion (will explain why I thing that some other time).

Happy week and trade!!!

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