In my last post about the EURCAD pair several days ago (July 9), I mentioned that the Loonie could be preparing for a revolt against the Canadian dollar. Back then, the pair already broke its downtrend line and appeared to be in the phase of forming the right shoulder of an inverted head and shoulders pattern. However, the pair did not fall back down to the bottom of the left shoulder. Instead, it found some support at 1.3000 before springing back up again. And just recently, the pair finally broke out from the mentioned formation. Having said that, this move could now be a reversal that could send the euro back towards 1.4500 against the Loonie. A break below the neckline again could push it back down to 1.3000.
Fundamentally, today’s worse-than-expected drop in the University of Michigan Consumer Sentiment Survey for July (66.5 versus 74.2) caused the investors to dispose the more favored currency, the Loonie, vis-a-vis the euro. Though the projected 0.25% increase (to 0.75% from 0.50%) in Canada’s interest rate this coming Tuesday (July 20) could propel the CAD higher over the euro again. Still, given the unexpected slide in June retail sales of -1.2%, hence a drop in business activity could be enough for the BOC to pause its rate hike. If this happens, then the Loonie would surely weaken as the market already expects that it would raise it. Stay tune!
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The Euro bounced down off my unorthodox Fib 61, see charts on Hawaii Trading
My prediction of “Dine in Hell” from Wednesday night, came true. note the “Devil Pattern” which is essentially the same as Trader Steve pointed out twice, this same week.
oahutrading.blogspot.com/2010/07/dine-in-hell-or-get-pounded-by.html
ES appears to have mostly decoupled from the Euro, and the bond and US FX markets are just acting kind of weird. Flight to safety or flight to inflationary monetary practices?
When the old school practices of safe haven are tried, and a Gila Monster is lurking therein — perhaps then the real panic starts.
ES did a nice backtest on the 100% channel of the PRS 133. Unfortunately unless you were trading late Thursday, uh, I was doing drywall….ouch. But was 50% in on a short futures, so that was nice.
This is expiry, so Monday and Tuesday next week can definitely see some big moves. I will remain 50% short.