I wanted to respond to this question from Jay on the Euro from a few days ago:
“Hello, I watched your videos last week where you called for the euro to continue much higher based on the confluence of your indicators. As we’ve seen euro has reversed and near breaking the 1.3100 level.
I know no analysis is right more than 50-60% of the time but if you could revisit this trade and where your better indy system may have missed the reversal or where we as traders could have spotted it. I think would help us to make better observations when looking at some of the signals and weeding out false signals in the system. Thank you for your work.” Jay
And the timing is appropriate. Today, Sunday, the Germans are voting. Angela Merkel is the most important politician in Europe right now – so her election success will have a significant impact on what happens next in Europe.
As for currencies. I think political leaders, economic and taxation policies used to be important when figuring out what a currency was going to do. But as I keep saying: “We’re through the looking glass and the old rules no longer apply”.
I think what the Central Banks are doing has far more impact on forex. And we know the Japanese and Swiss Central Banks are directly intervening in the Euro and Eurozone assets (sovereign bonds, corporate bonds & equities) to keep the Euro strong and their currencies weak.
Last Euro dip generated a RAMBO pattern
Euro Dips Down to $1.31 then Breaks Back to $1.35
So now we can see what happened since Jay’s email. The temporary panic generated a dip and signalled a RAMBO pattern. Showing the Amateurs were panicking and the Professionals had been buying the dip. We’re now back up to $1.35 against the US Dollar.
Sharp moves down are designed to panic “weak” hands out of positions. By clearing out the sellers like this it allows the market to break free into an unopposed uptrend. The “weak” hands are either out of the market or have reversed Short and now need to cover – adding additional buying to the breakout move. The RAMBO pattern at the bottom of the move shows it’s the Amateurs selling.
Good luck with your trading next week.
