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

Quote from trade-ya1:

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.
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Neal,
Not that I'm going to hold a long position from here to 1.20, but I think 1.20 is a poor place to abandon a long term view of the Euro strengthening against the dollar. Remember that only three weeks ago (8/4) the Euro bounced off the 1.1970 area. There was a lot of buying interest below 1.20 and it didn't spend very much time down there. The Euro rising against the dollar has never been a Euro strength story but rather a dollar weakness story. It looks like the budget deficit and the current account deficit are going to continue to grow and that will mean more dollar weakness in the medium and longer term.
 
Thanks for your comments. I agree with you. When I said 1.2000, I didn't mean that I was going to stop myself out exactly at or below 1.2000. I am just saying that if my opinion is correct, I believe that we should not revisit those lows again (as you state 1.1970). If we do, I really have to question my long-term view. In all likelihood, I would really abandon the trade below 1.19 in terms of actual outright liquidation of my positions. However, below 1.2000 would really scare me and get me to think long and hard about a change of view. Thanks for your comments. Neal.
 
Quote from TGM:

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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The irony is a lot of people (seem) to agree with the currency regime change, but they believe it's the other way around: The Euro on the cusp of taking over the USD. It may, but I can't see that happening; while the US has problems, so does Europe. The difference from where I sit is the American problems are known and acknowledged; on the other hand, the Euro-zone's future meltdown doesn't seem to be registering at all. I'm not sure this is the turning point; I'd like to see some strength in the US economy before going that far.

I'm still not sure what to think of the equity markets. From what I see, the path of least resistance is down; I have a sneaking suspicion that the activity last week was nothing more than an over-sold bounce and short covering. Lately, I've been following the VIX and VXO and there's just not enough fear in this market; if anything, the perception still seems very positive.

You may definitely be right about this being a bottom and money about to be poured into the equity markets, but I need to see a few things happen before I commit to long US equity positions. I'm basically going to sit things out until mid-September; hopefully, I'll have a better indication then. I wouldn't be surprised if the money that may come out of the Euro markets goes into the UK and Asian markets. Speaking of which, I think South East Asia is going to become an enormous powder keg just waiting to blow.

With China booming and Japan's economy taking off..... things will be interesting.

All in all, just my loosely slapped together opinion. I may very well be completely wrong... only time will tell.

I was short EUR/USD from around 1.2300 last night. Of course, I allowed myself to sit and watch it and got scared out. You'd think by now I'd have at least SOME faith in my calls... lol.
 
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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Neal,

I can't comment on the long-term prediction for Eur/$ but as long as you're putting long Eur positions within your risk limits and be able to sleep fine then you're doing OK. Be careful, don't let butterflies start showing up in your stomach. Well you know, we can't predict madness of people :)

Good luck,

Chinook
 
It was a roller coaster ride for me today. My overnight long got stopped out while I was asleep before the US open. After sleeping only for two hours, my mind got into an interesting zone and I started going after 7-8 pips at a time both long and short. This is something I don't usually do. But I did about 8-9 successful such trades one after another one. At that point, I couldn't believe what I did and the accumulated $$ profits within a short time frame. That was the THE SIGN (my surprise for the profits) to stop trading for the day. Then my mind got hazy. I had this strong belief that Eur/$ bottomed out and started going for the long side with wide stops. I gave back all the profits back and then ended up losing more than my overnight loss. On the bright side, I clearly remember the point where I told myself to stop and how I felt at that point. Anyway, it was a different kind of day for me and I paid my tuition for it. The week is still fresh.

Happy Trading,

Chinook
 
SteveL91,

Agree with you again, I believe America has many known problems. In Europe, there will be many surprises (esp. immigration/demographics --far right etc..). We all hear all the horrible fundamentals affecting America (I have heard about them my whole life). People are dead right based on these fundamentals to be long term short the dollar. However, it is impossible to be a trader in the "long term" sense. How many times have you been dead right and did not make any money? Or did not make enough dough given your insight? I would have to confess ---many times ---for myself.

On the dollar, damn the river when it floods NOT BEFORE. I am short the Euro (and to the lesser extent Cable). I am offering Euros all the way back. My models tell me we should have one to two days sideways at the most and then a follow through lower. Of course, I could always be wrong. Can't tell till you bet.
 
Quote from TGM:

SteveL91,

Agree with you again, I believe America has many known problems. In Europe, there will be many surprises (esp. immigration/demographics --far right etc..). We all hear all the horrible fundamentals affecting America (I have heard about them my whole life). People are dead right based on these fundamentals to be long term short the dollar. However, it is impossible to be a trader in the "long term" sense. How many times have you been dead right and did not make any money? Or did not make enough dough given your insight? I would have to confess ---many times ---for myself.

On the dollar, damn the river when it floods NOT BEFORE. I am short the Euro (and to the lesser extent Cable). I am offering Euros all the way back. My models tell me we should have one to two days sideways at the most and then a follow through lower. Of course, I could always be wrong. Can't tell till you bet.
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Until I get more experience, the equity to sustain the drawdowns and the confidence to know I can come back, I can't and won't trade my beliefs. For right now, I trade what I see even if it conflicts with my beliefs because they're two seperate things and generally on different time frames. While I have no idea of the magnitude of the move, I think short is the side to be positioned on.. at least for the time being.

Short cable looks like a good position as well. The only thing I'm not sure of is whether or not the move is over-extended. I haven't seen any real signs of a reversal, and today's strength in the pound didn't seem to carry over in cable.
 
At this stage, I'm betting for an overnight bounce. I'm long from 1.2140 --stop set at 1.2120 and target set at 1.2196.

Chinook
 
Quote from chinook:

At this stage, I'm betting for an overnight bounce. I'm long from 1.2140 --stop set at 1.2120 and target set at 1.2196.

Chinook
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I'm also long (from 41). Why did you pick 1.2196 as your target (I haven't picked a target yet)?

Cheers
 
Quote from TRADERguy:

I'm also long (from 41). Why did you pick 1.2196 as your target (I haven't picked a target yet)?

Cheers
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Hi Traderguy,

The session low so far is about 1.2130, if we see a bounce from here 70-80 pips is likely.

Chinook
 
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