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John Jagerson: Well, pretty exciting day in the Forex actually. We got a couple of things going on that really popped my attention. But, I think it is particularly relevant to the Euro/US dollars which obviously was the subject of a lot of traders attention today because we got this big bounce office support, but what is causing that? A couple of things, I would blame it on primarily Chase comments today that there was a potential for rate hike in the future. So that is significant. That was quite a dramatic hint and it took the market by a bit of a surprise as evidenced by the dramatic move up of with support.
The second thing that I am watching by the way are mortgages. So this is interesting. We have been looking at the sub prime issue in the US for a while. Mortgages hit a record, all time record foreclosure rate, late payment rate. They are with the release today. We are getting a lot of bad news about the US economy, mortgages. The reason why this is so problematic is not only it does an impact to credit crisis, so it tightens liquidity in the credit market which so far today has been pretty stable, but it has long-term impact on the US economy in general because it impacts the US consumers. So, as consumers are not able to get out of their mortgages, I mean, if you are in the US you know this is and even I am man, cannot get out of this mortgage. I cannot sell this house for enough to cover the $4 million plus mortgage videos. If this is happening all across the US, it pretty much in every income bracket. That is obviously going to impact the economy which in turn is going to impact the US dollar. You combine that with Chase comments today and we get this very interesting price formation that is continuing to form, it is interesting.
Let us look at the chart of the Euro/US dollar and you will notice that since the rise in price since February or so, the market has began to consolidate a little bit and it has been essentially bouncing off of this horizontal line, it has been the 38% retracement level in fact. It has been bouncing on that line just bounce again today and we are continually to get this dollar sloping, triangle forming here. Well, we are keeping up on that upper boundary. Are we going to break it or are we not going to break it? Tomorrow maybe, somewhat disruptive, if the NFP report is really positive, we could see a bounce back down towards support, but we are watching this very closely because the break of this pattern that could be a significant signal to – we enter if you are not already long, the Euro dollar for the intermediate term play.
And, there was a couple ways for us forecast to this opportunities. We are looking at just a simplified version of what is going on the Euro/US dollar. There are a couple of ways to approach this, you can measure the move that led to the top of the triangle and then take that and try to measure that to the upside, that puts us in the mid 70s, 170s, can you imagine. And yet, it continues to move so this is certainly not something that is outside the realm of the possibility. I think it is within the realm of likelihood. It is something that we pay attention to very closely. It takes us in the mid 70s. Alternatively, however, this is something that I have a lot of success with. I will take the Fibonacci retracement and pin it to the top of the market, so the recent top of the market all the way down to the bottom of the market in this consolidation pattern and it gives me a Fibonacci projection level. So I just need a 161% and the 261% projection levels, 261 I think is the more safe estimate. So, into the 60s and the 261 level actually takes this up to basically almost that same projection level we would have based the prior move on. It is an interesting way to seek some confirmation about where is my target, what would I start to look for. This is intermediate term.
Now, you can take this one or two ways, to be a longer term trader such as I am, I am looking at this as a nice opportunity following a break out here of this consolidation pattern. That is a nice opportunity to get long the Euro/US dollar. Alternatively, it is a way for us to establish our buyers. So, from a technical perspective, what is our buyers, what do we expect of the market in the intermediate term over the next three to four months? What kind of short-term trades are we looking for as they would take advantage of that buyers to be upside.
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