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EUR/USD again bulls in the EURO, short fail.

|Includes: ProShares Ultra Semiconductors ETF (USD)

I apologize for my stop loss (-206 pips for a daily strategy) on EUR/USD, is very sad in this cases the job of the trader and who is living of trading, but we need to accept and put a stop to losses when it's easy to do so and we are not at important new lows or highs or we risk to increase the losses just watching and waiting, what?

A part UNG, this week and the next is happened something to EUR/USD that need absolutely to be monitored in the next days.

Ok, the pattern bearish was forming was not so good due to technical indicators that was not looking so good and where very near to be oversold in few days.As you can see in the charts the main horrizontal support are 1.3825 area and 1.3750, and dynamic levels of trend line that should us let become again suspicious of a bearish inversion will be in the next days the levels of 1.4050 and 1.3925.

A pity because I had 2 sell signals in the past week and the market touched 1.4006 level so this mean that the pressure there was of bears, but was not sufficient because the bulls are putting a lot of money on the EURO and buying.

The charts now speaks lonely... we do not need so many comments on it, the candle or bar or movement of the last day, friday, is big enough to let imagine the desire to breakout the resistances above 1.43 area that could letterally make fly the EUR in area 1.47 next resistance and max touched with crazy volatily some months ago and you should remember.



However I remain suspicious about the bullish scenario that will see again the EURO in area 1.47 so soon, we need to think a bit about it because:

1. it's true that with indexes bullish, EUR is bought and money come back in emerging markets and EURO is seen also as agglomerate of emerging countries, think when and if turkey (big economy seen in 2040 from PriceWaterhouseCoopers big like Italya and so a G8 economy), croatia and other small economies will slowly enter in the European Union.

2. It's true so that EURO is bought right now that U.s. indexes are still bought from investors high after high and even if considered by major analysts overbought and in imminent corrections we are still on the top. And I'm agree with who think that the rally of indexes is not a sane rally and need a big correction of at least 15% from those levels, aganst a just 3/5% mentioned by Jim Cramer days ago (may be a bit fearfull of bulls mantain a so low target).

3. Now let's thing to the long term.The EURO touched the high at 1.60 area when Bear Stearns went in bankrupt.That day the USD collapsed and then investors decided that that was the bottom and that they couldn't do else now to buy USD and realize profits done on the EURO since year. Also that was a strategy of managers that were forced to sell assets in profit instead to sell cheap assets crashed like U.s. and stocks in generally.

So what I could think now is that:

a. is not sufficient to consider closed a bearish cycle of EUR/USD a just 4 months bear movement from 1.60 to 1.23, we should have  a bigger accomulation or at least a 1 year or 2 bottom formation. This mean that the EURO bullish trend in the long term is still in act and we can see prices above 1.60 area in the future.

b. that the investors didn't wanted to sell really the EURO and the sales was due just to a take profit and that investors still can't trust to put money for long term in USD. In this case we can think so that the market could have the power to test again the area around 1.60 but that could again realize that to hold USD could be interesting again, because the world is all in the same situation, if go in bankrupt the U.s.a will go the European Union to and who cars if the other money will flow in Yen, Chf or whatelse, let's think to EUR/USD now.

I could continue with a lot of scenarios, but I just want to watch at the chart, the monthly and I can't see other than this scenario more probable:

SCENARIO 1: to try again a short year, a bearish inversion and a potential double top 1.60 with 1.47/4350 area, we can rally in the next days not above the 1.4350 level and so make a bullish trap in few days because we are at just 100 pips from that level and we rallied for 250 pips in the past 2 days.

SCENARIO 2: we go in breakout of 1.4360 area and we rally till 1.47 first and then the market will try to form a distribution of some month in an area I can estimate betweek 1.5250 level and 1.60 level, with the risk, that if this distribution willl fail we will go to breakout the 1.60 level and we will have time to speak about this.

Sincerely, I don't have the perception of what will happen next week, but I can tell you that for how strong was the rebound of EUR/USD in the past days, is unlikey the SCENARIO 1 and more probable the 2... this mean a very weak dollar again.

Now this go in contrary of the correlation that there is actually between the indexes corrections because I think we should see still a correction that will clean a bit the market from bulls and will give courage to bears to cyclically enter long for the long term and close shorts.

May be that a weak dollar could be seen as a signal of economy still sick in the U.s. an a desperate need to devaluate the currency to stimulate the exports. Or a more serious problem... what I know is that since this week the charts of EUR/USD are very HOT and merit big attention in the next 2 weeks because we could see clear signals bullish or bearish that could influence the trend of several month, so from this point we will not come back soon... is an area that we will leave for a traver of several months.
 

That's all, let's hope to find soon a nice trade on the USD, for now I'm out and flat again, and eyes again on UNG only.