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Cliff Wachtel
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Cliff Wachtel, CPA, is currently the Director of Market Research, New Media and Training for Caesartrade.com, a fast growing forex and CFD broker. He covers a variety of topics including global market drivers, forex, currency hedged and diversified income investing, and is currently working on a... More
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  • EUR/USD KEY TRADE PARAMETERS, CONSIDERATIONS FOR THIS WEEK MARCH 15-19 0 comments
    Mar 15, 2010 8:43 AM

    NB: For our full take on likely market movers for this week, see: Stocks, Commodities, Forex Market Drivers March 15th- 19th: Weekly Review/Preview. For a quick outlook for the coming week of each major currency, see FOREX WEEKLY QUICK REVIEW/PREVIEW: MARCH 15TH-19TH

    Market Summary

    Stocks: Prior Day: Asia, Europe up, USA down. Today: Asia, Europe down. Stocks down as they approach 12 month highs amid multiple concerns over China growth, EU debt crisis and Finance Ministers Meeting, significant event risk this week (see events) The bellwether S&P 500 is again pulling back from its upper Bollinger Band, raising the probability of some pullback, though the prior 2 incidences of this saw no such move down.

    .- FX: Slight bias to safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as flat/down stocks reflect market seeking direction from news over the coming days.

    - Main events: FRI: USD: US retail sales+, UoM Sentiment-, MON: USD: TIC Long Term Purchases, EUR: EU Fin Ministers Meeting through Tuesday, TUES: AUD Monetary Policy Meeting Minutes, EUR German ZEW Economic Sentiment, USD Building Permits, FOMC statement, Bernanke Testifies, WED: JPY BoJ Press Conference, GBP MPC Meeting Minutes,

    - Big Theme: Stocks pulling back from 12 months highs as numerous concerns this week raise doubt about further risk appetite, USD rally at a crossroads (see EUR/USD CHART). Resolution could come from the EU Finance Ministers meeting and / or the FOMC statement.

    Big Picture

    Short term: The S&P 500, our key risk asset barometer, like other major stocks, stuck at / near the resistance of new 12 month highs, with considerable uncertainty from events noted in the market summary at the top leaving markets without the conviction to push higher. Other notes of concern for the risk asset rally: The S&P 500 has begun again to pull away from its upper Bollinger Band. That hasn't meant much over the past month, but usually it signals a pullback to at least the 50 day SMA. Also, commodities have begun to pull back, and they often lead stocks down. Their drop is more noteworthy because it is occurring over the past days despite USD weakness, which USUALLY bolsters commodities. As noted in Stocks, Commodities, Forex Market Drivers March 15th- 19th: Weekly Review/Preview, much depends on whether the EU finance ministers meeting actually produces clarity on how/if Greece will get through the coming months, and how the EU will deal with similar situations going forward. Also the FOMC statement could be powerful IF it shows unexpected hawkishness, which would contrast sharply with the stance of the ECB, BoE, and BoJ.

    EUR/USD Trade Parameters

    Currently around 1.3722 As noted above, it retreating in the face of strong resistance in the 1.3700-1.3800 zone, which is crammed with strong long term resistance points including a down trend line over 4 months old AND its 50 day SMA which is already in a widening 'death cross' having crossed under its fading 200 day SMA, suggesting more downtrend ahead over the longer term. Likely long term pressure on the Euro from the EU debt crisis confirms the logic behind the technicals.

    EUR/USD DAILY AVAFFX CHART 04 MAR 15

    Short: At current levels, profit taking target just above the 1.3600 level in the near term, with stop loss just above the 50 day SMA and less than a third of the distance to your profit target for a 2/1 reward/risk ratio. NB be ready to exit if any concrete details about a Greek rescue emerge from the Monday-Tuesday EU finance ministers meeting. Likewise, if no such news emerges AND the Fed is unexpectedly hawkish, increase profit target to just above the 1.3500 level

    Long: Only on decisive breach over the 50 day SMA AND some underlying positive news on the EU debt crisis or deeply negative USD news. This is a well entrenched downtrend, caution trying to fade it at this time.

    DISCLOSURE AND DISCLAIMER: OPINIONS EXPRESSED ARE NOT NECESSARILY THOSE OF AVAFX, AUTHOR HAS NO POSTIONS

     




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