EURUSD remains contained this morning.
Written January 29, 2010 at 9:53 AM EST by Greg Michalowski
The low for the day was reached in the Far East sesssion at the 1.3911 level and the market has not been able to approach the level in the NY session. The price has reached a low 1.3918 and remain near the lows, but the sledding is rough so far. Action remains focused onthe USDJPY which is moving higher and the GBPUSD. EURGBP also continues its move higher from yesterday.
Look for support at 1.3911, with stops below.
Categories: Forex Trading |
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This has been one long slide for the EUR/USD. I know that it may have been “over-valued” and needs to “correct” itself, but is there any indication at all that the trend will reverse any time soon?
Just wondering…
It is a slide that seems to be frustrating dip buyers. The serious support comes in at 1.3800 for the pair. It might not be until we approach that level that the market finds the serious buyers.
I hope that we find some serious buyers before then… Haha. I only have a few positions in EUR/USD that I am not too overly concerned about. At least not yet, but it would be nice to see the EUR rebound some time soon.
But meanwhile… trading the EUR/JPY has been has been the solution for me.
Getting a bounce now on the failure below the 1.3911 level (low reached 1.3903). 1.3935 is the next target level above, then 1.3950.
Up, up and away… Haha.
Greg,
I expect Euro /usd to rebound again to 1.4000 level keeping in mind today being friday. Normally short coveing day.
Again on sunday night this pair normally moves up, i do not know the reason why it moves up always on sunday, but moves up……
Hey Greg,
the EURUSD has reached the 200 week ma @1.3857 do you think it is stronger than the 50% retr. level on the daily chart which correspondes to 1.38 and it will rebounded it and no need to wait for that fibo. retr. level?
Thank you
Aha! I did not see that! Thanks. Yes it is of significance and a level that the market can buy against with stops below….A break would than target 1.3800.
Thanks for the heads up!
Greg
Sebastian & Mani, because it’s rigged. Banks/dealers can place a off-market quote directly in market depth via level 3 and cause a spike in the short-run. An attempt to kill leveraged traders. You see how long euros been going down? Just wait and see fast it goes back up. It will be very “unexpected”– only because trades that are long are getting stopped out by this massive stop-run. Market finds a low and rallies when a trader who is long has gotten his margin cut. and vice-versa for a high.
There is significant demand for the EUR/USD (@ traders are 66% LONG, banks 66% short)– and has been since $1.48 handle but the euro still continues decline. Looking to cut the margin of majority of the crowd that is long. As you all know, retail traders are leveraged, bank traders aren’t. Real money controls price more than leveraged money. Should be obvious. Banks control the market, doesn’t matter what you wanna do.
I apologize in advance if stating the obvious is making me seem like I am trying to sound “smart,” or like a “conspiracy theorist.”
. Just putting in my 2 pips.
Greg,
When i draw a trend line to Euro /usd in hourly chart, the resitance level is max 1.3950. Am i right?
Thanks
Sorry Greg I did NOT read your reply for Sebastian above.
I ask you because You are my teacher who I learn from.
I thank you for your 2 pips, but I disagree. The market goes down because there are more sellers than buyers. To think the banks care about retail clients positions that the banks know where the stops are from retail, that banks have a knowledge where their liquidation levels are is simply not true. Banks may control the market but anyone can follow the charts and see if a price is above or below a moving average and therefore see the trend direction. The EURUSD is in a downward trend and if any trader wants to be long while the price trends down that is the choice of the trader – whether retail or institutional. The move down has been orderly and congruent with the ups and downs of a market. Which has nothing to do with leveraged or un-leveraged accounts.
Greg
It is around that level. I see it around 1.3970ish. Greg
Not a worry…The reply was when the EURUSD was moving higher after bouncing off the low at the time. The correction could not get to the 1.3935 level nor 1.3950. As a result, the market turned around and sold back off. The support at the 200 week moving average is a key level to hold. It should bounce. If not… we know what to do… Get out…
Greg
Greg,
In my daily chart, i have fib support / resistance levels in addition to 100 and 200 SMA.
I want to add more support /resistance levels like “Remembered prices”.
Where do i get from your web site? I want to add in my set up the remembered price levels which are coming within the fib levels, 0 to 100 %.
If not available in your web site, if you can answer here, it would help me a lot.
Thanks.
Mani
Hi Mani,
I would suggest that you start a journal or create a spreadsheet and start tracking the major Support and Resistance levels for the pairs that you trade. These levels repeat over time. I like to think of them as levels of high price activity. You already listen to our daily videos, where Greg gives the trading ranges each day. That will give you a good start. Sincerely
Shawn Powell
It would not surprise me if traders all change their mind and EURUSD is playing in the $1.51 handle by months end. Seems like a 2nd leg correction, but as fellow Elliot wavers know, it’s leg 3 you wanna catch. EUR/USD has been hitting the floor hard after Goldman Sachs comment about $1.55 handle back in early December. It still surprises me how these so-called “top investment banks” and “analysts” get it horribly wrong.. (OR right, because they have enough $$$ to handle a draw-down + set up an exotic hedging model), and then blame it on short-term noise by “irrational investor reactions”
+1 to Shawn’s comment. Nice to see someone calling BS and not conforming to the “textbook norms of the market”. I don’t think you’re trying to be smart nor do you sound crazy! In regards to your comment about leveraged and de-leveraged positions, I would tend to believe an outright purchase/sale has more significance/credibility than a purchase/sale on leverage– a lot like buying a car cash vs credit. Cash lets them know your serious and you can have the car today! Credit.. well what’s your FICO? How long have you been employed? etc. You get hit with additional costs. I’ve learned an important lesson in my college days which was to never hesitate to state the obvious, because it’s usually the right answer.
Other participants may not know you have made a leveraged purchase/sale but ultimately the dealer does. As they have access to this(ie. which client made a trade on leverage vs not) information and can act accordingly to optimize their portfolios– by way of hedging via forwards, futures, options, etc. And your absolutely correct they will not share this information with you– it’s a natural information advantage BECAUSE they are the broker/dealer. If you want the same advantage, start your own brokerage ;]. I hope I have clarified some of your concerns. Remember money talks and credit… well is why we’re in this recession in the first place!
All the best,
Harold
Thank you for your comment.
I am still not sure I agree with the overall theme. I just think that with many market makers with varying positions, and customers dealing in real time every second of the day, that a market maker is concerned about the aggregate position, not any one customer no matter it is a leveraged or non leveraged customer. Each go into the pot that defines risk and that is the banks concern. Plus the leveraged and non leveraged trader always has the ability to reverse the position at any time. The positions don’t stay static.
Like a lot of things, I guess it will always be open to debate, but I think the market is huge. There is buyer and seller at every level and positions change. The one thing equal to all is the price at any one time. This price, when looked at in relation to the price chart and things like moving averages, tells the story about the bullish or bearish bias. If banks are in total control and they define the trend direction, then trade the trend direction too. This is under the heading of “if you can’t beat them join them” . So don’t trade against the trend.
Kind regards,
Greg
This “free-fall” of the EUR/USD has sparked some good conversations. All I can say is that it has been very interesting to follow the recent trend of the Euro.
On another note… Cash money always speaks louder than the money you “borrowed” from someone else. While the Forex market is huge and one person may not matter, an aggregate of all the small traders that trade on margin may. After all, if you’re out fishing you’re not just trying to catch one fish… you’re trying to catch as many as you can. Is that what all the “big” players are trying to do to us small traders? Hmm… I don’t know, but it’s an interesting point Shawn/Harold.
Anyhow… lets hope the best for Euro is up ahead.
Greg,
I agree with you 110%. I am not speaking of individual client positions but the aggregate position held by the dealer/market maker. Like all participants in the market place, individuals/firms need to manage their aggregate risk exposure. It’s not entirely the fault of the dealer– more of a reaction which sets off a chain reaction in the underlying security/currency.
More importantly, the reaction may necessarily NOT be caused by a FX transaction. (ie. Dealer offsetting in another market, ie. options, forwards, etc.). I am not undermining the importance of moving averages, fibonacci, trendlines as they are all important tools– my comment was geared towards emphasizing to Shawn that deal-flow is not just isolated to the FX market.
Whether it’s a individual security or a portfolio of securities. At the end of the day, we all have to manage our individual risk exposure.
All the best,
Harold
Thanks Harold. Your thoughts and comments are appreciated and creates for interesting dialogue. I am glad at the end of the day we are all responsible for what we do and the risks we take.
Cheers,
Greg
I agree… there are always going to be “conspiracy theories” and they all sound good, but at the end of the day, if you don’t manage your risk accordinly, there’s no one else to blame but yourself.
Thanks for the comments… I didn’t think my question/statement would cause this much of a stir. But you guys are too funny. I never said/believed/or implied brokers/banks are stop/margin hunting small traders.
But now that you mention it, I am starting to believe dealers may be stop/margin hunting.
I understand prices can be affected by the ebb and flow of other markets. But I also know the market plays bluffs, corrects and margin calls over-leveraged positions and then continues regular trend. I rarely see 15-50 point drawdown on 1:1 or 1:5 trades. But as soon as you hit it 1:100.. 100-150 points against you. I’ve seen this happen far too many times to brush it off as coincidence.
Harold, I sense a hint of “this guy lost money and is jaded, so he’s blaming it on market manipulation” in your rhetoric. Simply not true.
Just because I think it’s rigged doesn’t mean I am losing. It’s actually WHY I am winning… to a point where I was told to change brokers. 98% hit is red flags to any dealer/broker/casino–considering FX is Vegas on your desktop
I do appreciate all the comments, But what I initially meant was that larger players know what the next base will be and they push prices to these levels back-and-forth with 100% accuracy. Consolidation is the trap. If the process margin calls traders along the way, oh well. You guys completely changed the topic on me, talking about portfolio exposure hedging and stop-hunting. Yes I know we all have different payoff frontiers. But that was not the point–the main idea was to figure out these base levels ahead of time.
Again, thanks for all your comments and good luck,
Shawn
Thank you for your thoughts but note they are yours. As an example, I still don’t see the “as soon as you hit it 1:100 …100-150 against you”. It seems you are saying that the dealers know your position and move it against you when you go with high leverage. I won’t ever agree with that. “The market” moves the price and the market is made of traders around the globe. All see the same prices and all have the ability to be long or short and either participate in the trend move of 100-150 pips or not.
Regarding larger players pushing the price as a group together, large players do deal with other large players in the interbank market all day – in fact it is where most of the volume does go through on a daily basis. Goldman is up against Deutsche Bank and UBS, and Citibank all day long. They are all enemies, playing for the same edge. They don’t form a “larger players” pool and push the market together against margin traders. That is just not true. Also, high margin traders have a choice with how much leverage they want to use at all times. I advocate managing risk and limiting risk to no more than 5% of the account. I don’t talk in terms of leverage but in controlling risk.
Regarding changing brokers I am sure it was not with FXDD. We would not say that.
Now larger traders may have an idea where the next base will be, but that does not guarantee it will go to that level. Sure they are better than most retail traders as taht is what they do for a living, but that is not because they necessarily have any more trading knowledge than a retail trader. A retail trader can have very similar trading knowledge and do just as well – as a relative percentage. You mentioned being right 98% of the time. I don’t know a bank trader with such a winning percentage – not even close.
Anyway, I am sure the intentions of all are not to be rude and sometimes what is typed is not what is meant (or is misunderstood), but if people are to comment on this page, I would ask that we all respect each other and make sure your comments are relevant to trading and not speculation about other things. I/we try to talk solely about trading,and strategy and levels and reasons for moves, and above all RISK and somehow we got sidetracked on rigged markets and what “the larger players do with the market”. Let’s not ruin what is a good thing.
Kind regards,
Greg
It seems that the EUR/USD may just be on the slow climb back to the top.
It broke above the channel today but the move higher is indeed slow. The price remains below the 100 hour MA and dragging up slowly with the 100 and 200 bar MA on the 5 minute chart. Overall, a typical NY Monday. Tuesday will likely bring more action overnight.
Greg
again, not blaming the dealer nor am I speaking about FXDD. That’s why I am still trading here
. Being under-capitalized and over-leveraged to make a large trade should be red flags to the overall market. As Harold pointed out and I agree with his statement that it might not be directly caused but a reaction to dealings in another market.
I tend to get that “reaction” more when I take a leveraged trade in relation to my account balance. I don’t know why, but it has happened far to many times to be considered a coincidence.( on my account and accounts of several people I know ). I am sticking to making 1:5 trades and it’s nice to have the option for 1:100–I never catch a high-probability range with 1:100 but always catch them with 1:5 trades– always. Kinda ticks me off because these ranges are typically 150-500 pips. Even when I leave room for a buffer I usually exit the trades at a loss if the trade is 1:100. I will only catch 2-3 point scalps with 1:100 levered trades, never a “good” range like I want to. Starts dancing for a few hours/days and then goes to target at the upper end of the high-probability range.
Oh the best part is when I set a take profit of 5-10 points, and the same bar that hit my target is the same bar that goes up 50 points in 3 seconds. I look at 5-10 second charts so go figure. Someone is making that additional money off my trade