This time is not like 2009 and 2010 for the Euro FX! (English Language)

Hello all,

in my free newsletter I send out to subscribers last week I have included this brief article focusing on the differences between this year 2012 bounce off the powerful, long-term 1.20 support area, and similar bounces we had in 2009 and 2010. Hereunder is the original text of the article, followed by my most recent analysis and comment.

‘In the first part of last week’s EUR/USD forex pair review, I have showed the long term support the Euro confirmed recently at 1.2140 on the EUR/USD spot market. The last 2 times the Euro came off the bottom of this huge sideways move we can see on the 20-year weekly chart, respectively in 2009 and 2010, price moved higher violating the weekly sequence of moves lower and then came back to the all the way half way back from lows to highs (blue line) where typically we have interest from long traders and program trading. You can see it in the picture below (check here the same image with comments). Will 2012 be the same? The half way back in 2012 corresponds to the 1.2620-30 area. However this year what is different is the position and direction of the 200-day SMA which is currently supporting price. While in 2009 and 2010 the 200-day SMA was out of the way and trending downwards, supporting a test of the half way back area, this time the 200-day SMA is flat and acting as support. I still expect the 1.2630 level to trade because there is where a lot of long interest is located, and historically it has been tested. However we also know that, on the weekly timeframe, price traded an extension long at the 1.2820 area which lines up with the 200-day SMA, and maybe professional traders are going to be be happy anyway with that price. Will the retail interest located around the 200-day SMA be able to distract smart money and program trading wanting to push price lower into the 1.2630 area? This is the main question and I believe it is going to be answered in the coming two weeks.’

Euro FX currency futures - Can you spot the difference?

Euro FX currency futures daily chart  – Can you spot the difference?

Comment: after analyzing recent trading action I now believe that program trading flipped to longs last Friday, October 12th  after price violated the next traditional short setup above the 1.2986 level. We are now trading within a weekly extension long from 1.2820 with targets at 1.3340 and then 1.3620. In this move higher price has the potential to climb above 1.2830. Shorts are warned.

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Filed under Articles, English language, Euro FX setups and trades

2 responses to “This time is not like 2009 and 2010 for the Euro FX! (English Language)

  1. This bounce is different than first two bounces, as now we are supported by a rising weekly trend line going back to 2005, we have made a Higher Low pivot versus 2010 which was a lower low pivot bottom from 2008/2009 pivot low. Thirdly notice the proximity between the 10 week ma versus 50 week ma during all three pivot bottoms 2008/2010 and 2012. With this bottom in 2012 the 10 versus 50 week ma is more contracted as we marked the lows. This proximity is a comparative reflection of the longs average draw down as pivot lows were made. During this lowest point of the 2012 pivot, the divergence of the 10/50 week ma’s, is significantly reduced as compared to the previous two bottoms in 2008/9 and 2010. That contraction of 10/50 ma’s this time around is a clue that suggests a reduction in the amount of longs needing to reposition as we cut up through the 50 week ma this time around. So I think you’re right on, 2012 is very different.

  2. Hello John, thank you for your detailed analysis here. I try to keep it simple attempting to spot where participation from smart money and program trading could arise. I was expecting 1.2620-30, but a weekly extension long from 1.2820 is operating at the moment, with targets in the 3340 and 3610. Resistance at 3480.
    Thank you for your comment
    Have a great day

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