FACTS ABOUT EUR:
EUR is the must liquid currency.
It is used by 17 Europe-member countries.
It is the most traded currency.
It is the most predictable currency.
It is quoted with a very low spread by most Forex brokers (especially
when quoted with USD).
It is the first choice of any good scalper, or EA coder, etc.
EUR CRISIS: 'A BLESSING FOR TRADERS'.
I was taught, as beginners in this business, to go for the
green pips (profits) irrespective of the currency direction. The basic
guide is to avoid a fight with the MAJOR TREND.
Forget all the rhetoric from the Eur councils: doubling, or
tripling the bailout funds, etc.
The fact remains that EUR is like a sick baby on a LIFE-AID
machine! Any time their major donors decide to withhold their credit line, the
single currency will be in a big disaster. Let me hold it there for now.
Just as a 'Forex guru' will never run out of new indicators/Alert
for sale to novice traders who refuse to learn, so shall a good Forex trader
continue to blessed and multiply his profits as long as the crisis
WHY? RISK AVERSION: EUR vs. SAFE -HAVEN CURRENCIES
When I say risk aversion in Forex trading, I simply
means traders avoid buying high yield, risky currencies(GBP, AUD,
NZD ,etc,.) and are buying low return, low volatile currencies like USD and
JPY known as 'safe -haven
currencies'. Also, since we are in a risk aversion trading circle which was
prompted by low CPI, interest rate cut, etc, by the central banks of these high
yield currencies, traders have no option but to buy the safe haven currencies.
Because of the prolonged economic crisis in European countries which negatively
affect EUR, 'BIG' Forex traders ARE HEAVILY SHORT on EUR in the month of May.
Again, since EUR is weak, traders pair it against safe-haven currencies
which are strong: USD and JPY. Hence, we have EUR/USD and EUR/JPY.
From my personal observation, as a fundamental and technical
trader who also has a good insight in EUR seasonal behavioral pattern, I
come to the conclusion that the month of May is always a bad month for EUR since
the advent of European crisis in 2010: Scan through your past monthly
charts for confirmation.
HOW TO GRAB THOSE PIPS? Technical Analysis:
If EURO strengthens for any news spike: ECB sounds hawkish,
or if there are any strong positive surprises out of Greece
(election), be calm. At the end of the rally, SELL the two EUR pairs.
Hence, 'sell the rallies in a down trend'. Since you
are now aware we are in a down trend for this month (MAY).
On the other hand if the risk aversion currencies I
mentioned (USD or JPY) is weighed down by strong negative news, do not panic.
At the end of the weakness, BUY the currencies again and SELL EUR, their base
For instance, the NFP number was USD negative on the 4th of MAY, 2012. EUR/USD sparks
up. At the end of the rally, the down continued!
It may interest you to take a quick look at the monthly and
weekly charts of the two pairs: EUR/USD and EUR/JPY. Post your comment here on
what you observe!
EUR/USD looks helpless like the American DRONE that lost its
locus on a spy mission at Iran/Afghanistan border and was captured by the
Iranian military in December 2011.
EUR/JPY looks like the North Korean rocket as it was about
to crash into South Korean’s sea on 12th
April, 2012 after its lunch.
ENTRY POINTS: SELL
For any EUR up -trust, or rally, look out for resistance
points where reversal candle pattern like Inverted Hammer, Evening Star,
Tweezers, and/ or Doji forms. Use a simple oscillator like stochastic with
the broker setting on M15 time frame. SELL at or above 80 (over bought level)
Add to your position at any resistance level each day. Take
some profits and allow the rest to run!Remember not to trade more than 2% of your equity for each
I await your comment on this article each day as you make