Weak Euro Zone PMI Triggers Sell-Off

The EUR USD had an inside day but finished lower.Technically the Euro fell to the bearish side of a steep uptrending Gann angleat 1.3444, perhaps signaling the end of this rally or at the least the end tothe bullish pace which has driven this market to its highest level since Aprilover a short period of time.

The EUR USD had an inside day but finished lower.Technically the Euro fell to the bearish side of a steep uptrending Gann angleat 1.3444, perhaps signaling the end of this rally or at the least the end tothe bullish pace which has driven this market to its highest level since Aprilover a short period of time.

Falling to the bear side of an angle doesn’t mean the trendis changing to down, but indicates the speed at which this market is rallyingmay slow down. The distance between the steep angle and the next angle isfairly large, indicating the Euro has room to break to the downside.

A bearish Euro Zone PMI report triggered Thursday’sweakness. Cautious traders read this as a clue that perhaps the European economyis not going to be immune from the same economic downturn affecting the U.S.economy. A slow down in economic activity will not be good especially sincemany European nations have begun to administer strict austerity measures.

Euro investors were also spooked by a news report which saidIreland’sfinance minister hinted that holders of Anglo Irish Bank’s subordinated debtmay not get all their money back. Traders are remembering what happened in Greeceand are not waiting for events to unfold before paring long positions orliquidating positions completely.

Although most of the Euro’s gain this week can be attributedto the Fed’s assessment of the U.S.economy and its hinting at additional quantitative easing, Euro bullsdefinitely received a wake-up call on Thursday, which may cause them to paymore attention to the Euro Zone economy as well as the lingering sovereign debtissues.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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