Thursday, 27 November 2014
Falling against the US Dollar since last May, the fall has paused during the last 10 days, within a long-term Resistance Zone established over the last 10 years. The downward pattern is strong. I predict that the EUR/USD will break out of the resistance zone in the coming 10 days and quickly drop to around $1.20
Tuesday, 11 November 2014
Click on image for a larger view.
We shorted too soon (Friday last, 7 Nov) and our Stop-Loss Order took us out. Now we observe the wedge closing, a strong indication that the securiy will plunge at last. We renew our short accordingly, looking for several percentage points of profit, and placing a Trailing Stop at 1% rebound.
Monday, 10 November 2014
This pattern has happened before (in 1999/ 2000): converging trend lines, chart hitting bottom of Bollinger Band, economic/ political forces putting Euro under pressure.
My bet continues to be that the Euro will plunge in the coming weeks. It will continue to decline until next March at least.
Friday, 7 November 2014
After this week's euphoria, the Dow will surley take a dip.
This may become the Big Dip, but a punt on a local dip is in order.
A Stop Loss in place in case we are wrong, and a Trailing Stop to anticipate the share pulling out of the dip sooner rather than later.
Click to enlarge image.
The pale blue triangle with which I previously depicted what I thought would be the top of the Parabola has been overpainted by the amber band which depicts the range of the present coninuing super up-trend.
The green band depicts the "normal" range of the Dow Industrials, based on long-term trend lines. The present trend has grossly overshot this range and is in for a fall sooner or later.
The amazing recovery from the recent bottom was sparked first by the FED asserting there would be no end of ZIRP in the foreseeable future, second by results showing that the American economy was entering a phase of self-sustaining growth, and, more recently, by election euphoria where electors appear to have temporarily believed that economic woes can be solved by giving the President a kick in the ass.
ZIRP (artificially imposed zero interest rates) will end when it is clear that the economic recovery in America is self-sustaining.
The election is over; the euphoria is abating and reality will now set in. Another dip is imminent. Could this one be the big dip?
Wednesday, 5 November 2014
Click on image for larger view.
The EUR/USD has hit its Support LIne (Line joining Bottoms).
Chart logic would normally suggest that it should now bounce off this Line to have a rebound against the US Dollar.
However, since the Resistance (i.e., Top) Line and Support Line are converging, eventually there must be a break-out either upwards or downwards.
Good economic performance in America indicates an Imminent interest rate rise in the Dollar zone, while Europe continues its Zero Interest Rate policy. This can only mean that the Euro will fall further against the Dollar.
A break-out through the Support Line could, therefore, be imminent, as the Euro plunges further against the Dollar.
Saturday, 1 November 2014
I was wrong. Instead of plunging, the markets have surged. Nevertheless:
1: The strong upward slope that brought us here, as I illustrated in a previous post, were caused by the policies of QE (Quantitive Easing) and ZIRP (Zero Interest Rate Policy). When the American economic growth is self-sustaining, these policies have to end, bringing a significant market correction.
2. The amazing recovery over the last week had two underlying triggers: the FED's assurance that ZIRP would end no time soon, and evidence that the American economic recovery is now self-sustaining. Ultimately these are two contradictory forces, since self-sustaining economic growth calls for an end to ZIRP.
3. I can hear the cocks crowing, which always happens on the eve of a market collapse. Bear voices are drowned and the market's champions encourage the fools with promises of even greater profits to come. The louder they shout the clearer the message becomes: we want to sell at the right price! See how the cocks crowed before the Irish property market collapse and then the bank collapse: the critics (within the department of Finance as well as the media) were silenced and we were assured there would be no hard landing and that the Irish banks were sound. Oh yes!