Chinook's EUR/USD (E/$)Mumblings

Something wild happened to me this morning, I started scalping (or whatever you call it) 7-8 ticks both long and short. NO prejudices in my head, I think my subconscious mind is just driving me to make money--thanks to my meditation and visualization sessions!

Chinook
 
First, I got killed today. Of course, due to risk management, things were not as catastrophic as could have been. In addition, I re-established my full long position in the EUR toward the end of today's IMM session (having stopped out on much of it during the session). I'd like to put forward my thoughts for comment and to personally help me organize myself.

I believe that the main reason for this significant counter-trend move is simply the date on the calendar. Put another way, the big money and real investor-set is long the EUR. This is supported by the longer-term charts (continued uptrend in the EUR) as well as what now seems to be improving fundamentals in the form of a softening of US economic indicators which calls into question the speed and pace of further Fed tightening. As this is typically the vacation period (last week of August) in the US, I believe that there is a perception amongst smart (yes, smart) shorter-term traders that there is no major impetus for the EUR to move higher in the very short term as many real-money accounts are unlikely to make significant moves this week do to vacations and reduced liquidity. Thus, I believe that these wiseguys (said in the most flattering way) have taken this opportunity to pressure the longer-term money during an illiquid and quiet week. As such, I continue to believe in the long side of the EUR trade and I believe that we are cleaning out the weak-handed longs with a lack of conviction or the johnny-come-latelies to the EUR trend.

However, I strongly believe that while today was quite a significant move, the short-term traders cannot and will not be able to push the EUR much lower before some real-money guys pick up their cellphones from the Hamptons and start lifting offers. If the EUR trades below 1.2000, I would have to seriously re-think my longer term opinions and strategy. At this stage, I do not believe that I will be put into that position. Respectful comments welcome.
 
Quote from trade-ya1:



However, I strongly believe that while today was quite a significant move, the short-term traders cannot and will not be able to push the EUR much lower before some real-money guys pick up their cellphones from the Hamptons and start lifting offers. If the EUR trades below 1.2000, I would have to seriously re-think my longer term opinions and strategy. At this stage, I do not believe that I will be put into that position. Respectful comments welcome.
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No disrespect intended, but it sounds like you're trying to find reasons to justify phantom Euro strength. From what I've been reading, the Euro-zone fundamentals haven't been good at all. While the U.S. data hasn't been too good as of late either, I think it's a case of the evil you know vs. the evil you don't: the soft U.S. econ is/was expected; what wasn't expected was a softening Euro.

Technically, this downtrend has been shaping up for quite a while. I didn't have the balls to stick it out the past few days (or even last night), but there has been a lot of trepidation and tredding water on the side of the Euro bulls from what I can see. Also, on the weekly chart, depending on where you want to draw it, a very strong case could be made for the move in early April of 2002 being over: the trendline was shattered with ease.

I'm not saying it'll continue to go down, because I simply don't know that, but I wouldn't be going long here either; I just don't see any indication of that.

Again, no disrespect intended as you've probably been doing this for the better part of my life. Just my opinion and what I'm seeing.
 
I appreciate your comments and I certainly do not take them with any measure of disrespect. I suppose that I am interested in hearing others opinions as this is the reason that I made the posting. As for justifying my position, certainly, I believe that is true. However, I would ask, isn't that what we are supposed to do? If we didn't believe in our positions, I suppose we wouldn't carry them. Nonetheless, my opinion of the overall EUR trend is that it is so strong and has been in place for so long that it certainly isn't going to die easily or without a major fight. Also, as you say, the longs seem to be becoming increasingly nervous. Typically, this does not happen at the inflection point of a major trend change. I recognize my strong bias and I remain cautious of not seeing ghosts and viewing things objectively as you state. If I didn't feel a measure of caution, I probably wouldn't even be thinking about the trade at this moment. Appreciate your insights.
 
Quote from trade-ya1:

I appreciate your comments and I certainly do not take them with any measure of disrespect. I suppose that I am interested in hearing others opinions as this is the reason that I made the posting. As for justifying my position, certainly, I believe that is true. However, I would ask, isn't that what we are supposed to do? If we didn't believe in our positions, I suppose we wouldn't carry them. Nonetheless, my opinion of the overall EUR trend is that it is so strong and has been in place for so long that it certainly isn't going to die easily or without a major fight. Also, as you say, the longs seem to be becoming increasingly nervous. Typically, this does not happen at the inflection point of a major trend change. I recognize my strong bias and I remain cautious of not seeing ghosts and viewing things objectively as you state. If I didn't feel a measure of caution, I probably wouldn't even be thinking about the trade at this moment. Appreciate your insights.
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Points well taken. I guess I have a short bias on the Euro because over the long term (years), I see the Euro dropping against basically every major currency, but I try not to allow that opinion to color how I view things over the short term. It's been a rough few months for the EUR/USD as it just can't seem to settle on a direction when viewing the weekly chart; a lot of battling going on. Not sure it's been resolved as of yet, but we'll see.
 
But the EUR is only a few years old and is only about 6% from it's all-time high against the $. I'll admit, I do not look at the EUR cross against many of the other currencies. Best of luck..Neal.
 
Quote from trade-ya1:

But the EUR is only a few years old and is only about 6% from it's all-time high against the $. I'll admit, I do not look at the EUR cross against many of the other currencies. Best of luck..Neal.
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It's really more a feeling than anything. I see the Euro-zone spiraling into a complete socialist "paradise." There's just too many issues going on there that they don't seem to be addressing. I also have a sneaking suspicion that the Euro currency may very well end up being dissolved at some point in the next few years so the entire area doesn't get pulled under. Really nothing solid behind it; nothing worth acting on from my point of view just yet.
 
SteveL91,

I agree with you on Europe. I started getting short the Euro early this afternoon on one of my rules. I was surprised the Euro went down as much as it did.

We may have a currency regime change going. If the US economy appears to be showing strength over Europe ( and that won't be saying much). We could get a lot of money getting dumped into the US stock market from around the world. I believe, we have seen the stock market lows for a while and are near a fixed income top. We could see a new "Imperial Circle" start. Of course, I am talking my positions. :)

TGM
 
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