Monday, May 31, 2010

EURO correction or trading sideways?

More bad news coming from Europe. Not only is the ECB expecting major loan losses from banks in Europe, on top of that German President Horst Köhler stepped down, the first German President ever to do that. The EU is already not that economically stable like it used to be, this news is certainly not helping confidence. If that's not enough, the defaulting by some members like Greece, and maybe more to come. Therefore I came to my fundamental conclusion that the Euro currency is probably weakening over the course of a short time frame, four to six weeks, against the USD.
I pulled this chart (30 min) of my trading station.

Now the debate of every forex trader trading the EUR/USD. Is the pair trading sideways or is there a correction after the sudden drop we saw a few weeks ago. In my opinion the pair is trading sideways and is going to fall even further, below 1.20 if the Eurozone is not showing any sign of stabilization. The pair, as you can see on the chart above the pair has pretty much been hovering around 1.23oo. With the US markets closed today, tomorrow I'm going to see where I can get a good entry point to sell this pair with a 50 pip profit target.

Disclaimer:

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