Happy 2013 Everyone!
First I want to wish everyone a great and prosperous New Year. I also hope you had a wonderful holiday season and enjoyed it with your family and friends.
WE HAVE A DEAL!
Yesterday it wasn’t looking so good that an actual deal would be made on the US fiscal cliff. Even though the senate passed a compromise bill it was looking as if the house was not going to vote on it. Well they caved in the way it looks and we have seen risk appetite run the Asian session 110+ pips on the EUR/USD. Here is the headline that caused the ruckus.
House Republicans Fold
*HOUSE REPUBLICANS ABANDON EFFORT TO ADD SPENDING CUTS TO BILL
However something is fishy about all this. Sure it looks good on the surface but they delayed any deal on the debt ceiling, leaving that to be dealt with at a later date. I have a feeling there will be a similar fight like last year when the issue was pretty much the same. The fact is without some exponential growth the US can’t get its fiscal house in order. The only other option would be drastic spending cuts and we know how Washington is about that. Even the tax increases that did pass won’t raise but a drop in the bucket to help the deficit. My guess this rally will be short lived.
Since the figures show that they actually have about 2+ more months before they totally run out of money due to “Turbo Tax Timmy G” cooking the books and pillaging entitlement funds to fund the bloated federal budget.
So was there really any cliff? I don’t think so, to be honest. Yes there are substantial cuts and tax increases built into the legislation that created the “fiscal cliff” but that bill was drawn up as a band-aid fix that I am rather sure none of them ever expected to come to pass. In that case there will be something done moving forward more than likely. Will it be substantial enough? I highly doubt it. The only path I see that has a possibility of restoring confidence in the US government is a far cry from anything that can come from the politicians we have. The ones who created this mess need to be held accountable, and the losses by the big banking cartels need to realized rather than keeping up the continual bail outs. Of course this may just be a pipe dream I share with so many others.. Eventually it WILL happen. But reform will come only after the inevitable economic crash. As Ron Paul said lately….we are beyond the point of no return. No matter what they do a crash cannot be avoided.
So we have the potential band aide in place but since its just covering a small part of a profusely bleeding wound we are still in the same place no matter which way we look at it. Now that everyone and their brother is manipulating economic data around the world, there are thoughts China is going to save the world and some even think the US will have growth of 3% this year. Maybe pigs really can fly…we will see.
As for the charts, they are looking rather crazy at the moment. The EUR/USD has a clear first push up and is coming into significant daily resistance at the 1.3300 level. There is potential for the short as the inefficient move up during Asia today tries to close with a move back down. With a clear 1 hour stop run to that level a nice 50+ pip short could be easily in the cards during the London session. Otherwise the places I would be looking for a long position will be the break out levels of 1.3255 or lower at the 1.3235 area.
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The GBP/USD looks just as nuts but has a clear 3 pushes to the upside so the potential for the reversal is higher. The next daily level that it may want to test is around 1.6455. I doubt it will make the run to the next high before a pullback. At this point I would be most comfortable with a short if a 1 hour stop run to the highs sets up at 1.6380. I would look to ride it to the support at 1.6272 or 1.6238. If it does manage a 1 hour close above these Asian highs then its most likely going up. If anyone enters the short take it as close to the highs as possible and watch that hourly close.
Today I leave you with an interesting video I watched over the holidays that everyone should see. Unlike the Thrive video I recommended everyone watch, this one doesn’t really try to point fingers even though its obvious who is at fault. However we all bear some blame for letting things get to the point they are today and they give clear examples of just where the US is in its last stages of being an empire. Just like all empires before it, the US is experiencing the conclusion as it falls into the abyss just like the Romans, Ottomans, Persians and all others. Its a great video to see. Here is the youtube link. Enjoy.
Sorry the video isn’t on youtube any more due to copyright infringement
Let the pipping begin.
Again we wish you all a wonderful and prosperous New Year.
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