Short Term Trading forex trading links forex trading books market statistics trader values euro and us dollar Shocks Crashing The Euro Will Plunge, Stocks Could Follow

Tuesday, 20 December 2011

The Euro Will Plunge, Stocks Could Follow

Do not get fooled by the end-of-year rally. In January, markets might fall again. Here is why.

The euro/usd has clearly moved below the neckline of the past 12 months at 1.33. It will eventually target the lower channel line at 1.28/1.26. January is one of the worst months of the year for the currency. Finally, the short-medium trend is bearish, considering the implication of the European crisis. Markets are anticipating the scenario of the next 3/6 months.

What could it be?

Well, here is my guess. Greece could default and Europe might reach the apex of this cycle. In effect, the C.O.T. (Commitment of Traders report) for the euro currency, published by the Commodity Futures Trading Commission, is already showing extreme oversold conditions for both speculators and small investors trading the euro/usd at the C.M.E.

It happened last in May 2010. The market fell for other few months, before bottoming out. A decline of the euro will plunge stock indexes as well. Lately, the two markets are correlated. What will be the targets of the S&P 500?  First, it could reach 1150, then 1100 and eventually 1000.
Angelo Airaghi, 

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Anonymous said...

Yes, euro and stocks will decline.

However, ecb´s decision to refinance various banks might help stabilize the euro in the longer'term.

ProfitsOn said...

Liquidity is desperately sought.

Banks would probably use ECB help for refinancing books at low cost and improve the cash flow.

At the contrary, government bond purchase should be limited. The euro could stabilize, if debt crisis and economic picture will improve.

luc22 said...

some nations could default next year.

ProfitsOn said...

Debits with private investors will come due in March/April.

Unfortunately, Greece does not many cards left.

Options Trading said...

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ProfitsOn said...

Great! What is your opinion on the economy?

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