“Happy 3 day weekend President’s Day … the only thing it’s good for!”
Well, the trading world can sure take a hint can’t it? What with Asia
basically partying the entire week away due to the Lunar New Year
festivities, and the U.S. closed down for President’s Day, what did you expect
the Europeans to do today coming out of the gate? “Right … and they haven’t
disappointed, cuz nothing has happened for 4 hours inside a 20 something PIP
range that is slower than the fattest kid in your 6th grade running up a hill”.
But, that was the first half of the European day; the second half, starting
around 12:00 - 12:30 server time, got a little more “dicey”, as somebody
started hitting the sell button, while watching SP500 futures get “monkey
hammered” lower. “Attention machines: the U.S. markets are closed today
… does that make any difference to you or no”? … apparently not, as the
SP500 gets taken 25+ handles lower, and with it most of FX … as I stated in
an earlier blog post, we’re all SP500 traders now in some form or another,
simply cuz it’s the de facto “interest rate bogeyman” when it starts to go
“Thelma & Louise”, and the investment and trading world go utterly
apoplectic over the prospect of the U.S. Treasury going over 3.00%.
And while the world still grapples with “Volmageddon” from U.S. equities
losing 10%+ in a few days a couple of weeks ago, FX appears to be taking a
“breather” today … perhaps it’s a good thing, cuz on the immediate horizon
for EURUSD are 1) the shaky politics of Germany, and more importantly
2) the March Italian elections, which at the moment look very problematic for
the E.U. … I wouldn’t be surprised to see EURUSD pull back and consolidate
into the Italian vote, cuz they just might throw a “monkey wrench” into the
E.U. and vote “Italexit” … and at the moment, that is a very real possibility,
despite their pledges to back off leaving the E.U. if elected. “Quite frankly, I
don’t believe them for a second; it’s simply an election ploy to gain votes … elect
the '5 Star' party and see what happens next”.
Not surprisingly, this “breather” would actually be a good thing for EURUSD,
simply cuz the pace of appreciation, or dollar decline if you will, can’t be
sustained at the pace it’s going from last March - April … from the 1.05 - 1.06
area up to the current 1.25 area. And really, in a historical sense, bull markets
don’t carry with them everybody that wants the “pony ride” of huge profits
… there are always “shakeouts” and periods where the market makes you think
“it’s over”, when in fact it’s just resting and shifting long positions from weak
hands to strong hands for the higher climb still. However, should the Italians
vote to leave the E.U., or the Germans find a way to screw up Merkel's “grand
coalition”, there will be hell to pay on the downside for sure.
Given the “bearish engulfing pattern/reversal” on the daily candlestick chart
from Friday’s multi-year highs, it shouldn’t be too surprising to see further
downside price in EURUSD even in these thin Holiday market conditions, and
that’s exactly what we’ve seen in the last half of the European session. In total,
today’s trading sees less upside bullish action than the ‘Brady Bunch’ arguing
over dinner … “Now that we’re headed into the New York afternoon, download a
movie, clean out the garage, or go to the gym, but leave trading alone for this day
… there isn’t anything here but trouble”!
And I’m happy to report, no exploding head this morning as I came to my
screen … seems my warning to Asia worked … either that or they’re just
messin’ with me! In any event, action will pick up again tomorrow, and we’ll
be here to capture some of it; no trades today cuz nothing happened early on
the upside, giving me any time if any trade turned out to be wrong, and I don’t
want to be subject to the “whims & fancies” of a New York session where all
the U.S. markets are closed. Ranges today a little wider than I would have
thought possible, but looking at EURUSD price now from Friday’s close, finds
the market only a handful of PIPS difference, right around the 1.24000 level.
If Asia can behave itself tonight [a big if], tomorrow has some good potential
… I’m outta here … until tomorrow … Onward & Upward!!
PAMM spreadsheet directly below.
Have a great day everybody!
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