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FX Commentary EUR/USD, GBP/USD March 19, 2012

This should be an interesting week guys. Since its is fairly light on scheduled news events the Smart Money will be free to play as they do normally and the EUR/USD and GBP/USD have had some nice levels created Friday that should have some follow through Monday before a potential reversal later in the week. The EUR/USD has had a clean 2nd level of rise and we are expecting a third. However it is being held by some daily resistance from last Monday the 13th. I expect an accumulation period during the Asian market and the stop run to the downside during London before the push north. Since it has that resistance to push through the stop run may be a bit larger as they get the orders weighted in their favor before the push.

I was kind of kicking myself Friday for missing the long on this pair since I did have a small bias short but did catch 25 pips of the move after the hesitation expecting the 3rd level of intraday rise. Not bad but 100 pips is better that 25 any day of the week LOL

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The GBP/USD is not quite as clear but still looks darn good for the long today. It has broke out of some level 3 price action and made a clear level 1 push up and gone into consolidation. I expect the same movement on this pair today also. Just remember that level 1 trades are less reliable. Having said that it does have an intraday 2 level rise from the bottom of the level 3 and does go with the long trade scenario. just be cautious of a longer stop run here also.


The weeks ahead

As you guys know I read up on events most all week not just because I am bored out of my mind but to get informed on what may be coming down the pike in the future. Of course then I relay what seems the most important at the time to save you the time and trouble of keeping up on the news. I do not trade off these ideas as since we are day traders the news (unless its a tape bomb) should have minimal effect on the Smart Money trend. One thing I was discussing with Sterling last week was given the fact that these big boys have government officials in their back pockets giving them info on what will happen with laws being passed and so forth that will effect companies and sectors alike so they can trade off this inside information. It leaves little doubt in my mind that these guys have insiders at the official data collectors offices that send them news release information long before the actual release so they can load up and run the manipulation game around the release. Interesting thought huh?

Whos next

In previous commentaries I have speculated who will be next in the line of dominoes that is Europe to fall so once I saw these two articles this week I thought I would lay them out for you and let you decide. There are plausible arguments either way. The first is on Portugal from the Telegraph.

Mohamed El-Erian, PIMCO’s chief executive, said Portugal will need a second rescue as the original package of €78bn (£65bn) falls short, setting off a political storm over EU rescue costs.

“Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector,” he told Der Spiegelover the weekend.

German finance minister Wolfgang Schäuble insists that Greece is a “completely unique case” and that there will be no further haircuts for banks, insurers and pension funds holding eurozone sovereign bonds.

However, the EU authorities broke their pledges so many times during the Greek saga that market faith has been shattered. Even Norway’s sovereign wealth fund has expressed disgust, signalling that it will give Club Med debt a wide birth from now on. It has already sold half its Spanish bonds.

Next is Spain 

Please consider these snips from The Fool’s Game: Unraveling Europe’s Epic Ponzi Pyramid of Lies by Zero Hedge:

If we just take the newest figures for Spain, which were released this morning, we find an admitted sovereign debt of $732Bn and a touted debt to GDP ratio of 68.5% which is up 10.7% from last year. In a report issued on 2/29/12 and apparently ignored by everyone including the ratings agencies, Eurostat reports that Spain has total sovereign guarantees of “other debt” which is 7.5% of their total GDP which would total around another $72.2 billion in uncounted debt. Then if we consider [all] the “known” debt we find: In the same Eurostat report, by the way, of 2/29/12 we also find that Belgium’s sovereign guarantee of “other debt” is 21.3% of their GDP, for Italy it is 3.6% of their GDP and for Portugal the number is 7.7% of their GDP. This does not include any guarantees of bank debt which would also have to be added in to the totals to reflect some sort of accurate fiscal picture. Consequently, as investors, we are not in some murky place but smack dab in a carefully engineered plan of outright Fraud where we are given manipulated and inaccurate numbers in the hopes that we will fund based upon them. Not only are published GDP figures a lie, so are published debt figures. The result is a complete farce in debt-to-GDP accounting. Meanwhile Spanish banks continue to plow into leveraged debt on their own bonds, with Spanish unemployment over 23%, with youth unemployment of 49%, with widening regional debt problems, with massive unrecognized housing sector losses, and with more austerity measures coming that will exacerbate all of the previously mentioned problems! This Ponzi scheme cannot last, which means it wont. Spain will implode. Indeed its a wonder it hasn’t already.

I will leave the rest up to you. I will be watching both for the time being. My money is on Portugal in a gentleman’s bet with a friend.

Happy Trading


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  1. DannyH
    DannyH March 20, 00:24

    Nice call Chad, I was short the EUR/USD from Friday afternoon which I missed closing due to the US time change, it gave up about 30/35 pips this morning before forming a nice V formation bottom. I took the long but held the short with a b/e stop also incase we did see an extended stop run down, as it turns out we didn’t just a long period of accumulation, before some b/s news about the situation in Greece improving kicked off the move up.

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  2. Chad
    Chad March 20, 00:41

    Thanks Danny, Im glad to hear that you guys are getting something from the commentary. Nice trades by the way. I have my doubts the Greek news kicked off the move though buddy. Its all in the Smart Money plan. I didnt catch the whole moves but did manage 100 pips on the day. 50 on GBP/USD and 50 on the EUR/USD. Ya gotta love it when a plan comes together.

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