At the start of the London session of
trading yesterday (March 30th 2015) the EURUSD pair went down, in a resolute
manner, through the 200 period EMA on the hourly chart. It oscillated for the
rest of the day but could not get up again through this important resistance
level. In fact the 200 period EMA now appears as resistance on a number of time
frames, including the 4-hour and even the 10-minute charts.
The chatter on the wires all day was,
once again, about the Greek situation. That country is facing a deadline of the
end of April to come up with solid proposals for settling its fiscal issues,
but there seems to be, at the very least, a certain amount of brinkmanship
going on. This has led some commentators to speculate that the Hellenic Republic
could, conceivably, find itself exiting the European Union by accident. None of
this helps the Single Currency.
Technically, yesterday saw the
formation of a bearish descending triangle, with the 200 EMA forcing price down
for it to be supported, for now, at a level that is just above the
psychologically important 1.08 level. That 200 EMA may not exactly be a brick
wall, but the longer it remains as resistance it could well be a Becher’s Brook
(a difficult, indeed infamous, fence in the Grand National horse race that is
held annually at Aintree, England). A fall below 1.08 has the potential to open
the floodgates.
Only
one bright signal
There is only one sign on the horizon
to support the Euro, and that is a contrarian one. The weekly Commitment of
Traders figures published by the US Commodities Futures Trading Commission
(CFTC) shows that non-institutional traders hold the largest volume of EURUSD
short positions since 2012. This might seem like another indication that this
pair is heading south, but many traders view such commitment by non-institutionals
as an indication that the security
concerned, in this case EURUSD, is more likely actually to go in the opposite
direction (institutional traders are not included in this type of analysis –
presumable they are considered to know what they are doing).
Time will, as is usual, tell the tale.
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