Bullish Breakout for the Euro

Published on
July 11th, 2019
Duration
7 minutes

Bullish Breakout for the Euro

Technical Trader ·
Featuring Dave Floyd

Published on: July 11th, 2019 • Duration: 7 minutes

Despite strong recent economic data , Dave Floyd of Aspen Trading Group believes there is high probability that rate cuts and recession are on the horizon. In this episode, he shares one of the macro indicators reinforcing this view, examines the technical setup for equities and currencies, and explains how rate cuts could be bullish for the S&P 500 and the euro in the short-term. Filmed on July 8, 2019 in Bend, Oregon.

Comments

Transcript

  • MM
    Mike M.
    26 July 2019 @ 20:36
    Dave F., it looks to have just made a wave 4 of C, and now in wave 5 of C?
  • DR
    David R.
    11 July 2019 @ 21:18
    The weak dollar looks technically set to tumble against almost all currencies (you mention A=C on the short timeframe and similarly we can see a potential A=C on the DXY daily going back 31 months with C starting recently and targeting near 80 if A=C). Curious about picking the Euro for a long. The euro looks relatively weaker than some other FX, but less weak than the weaker looking greenback.
    • DF
      Dave F. | Contributor
      12 July 2019 @ 00:39
      Well, the advantage of playing EUR/USD is that by default, if DXY goes lower, EUR/USD goes lower too - EUR is 57% of DXY. When you look at other pairs that have less of a weighting or not even part of DXY then you add a layer of ambiguity.
    • DR
      David R.
      12 July 2019 @ 21:07
      So EUR is like the anti-dollar or the first go-to for many who will want to get the hell outta the weak dollar, even tho EURUSD is substantially underperforming numerous other dollar crosses. Also, I suppose for those who trade via ETF, there is limited selection and the Euro ETF has best liquidity.
  • MM
    Mike M.
    11 July 2019 @ 19:29
    Thanks for the fundamental back-drop to this play...I've been in FXE for a couple weeks now expecting the same move. Completely agree.
    • DR
      David R.
      11 July 2019 @ 21:32
      I assume you're referring to the Nautilus observation about the spread between fed funds and the 2-yr. I to greatly appreciated that backdrop. US rates, dollar and economy are probably all heading significantly lower.
  • FA
    Frank A.
    11 July 2019 @ 18:01
    How many times have we heard this.....almost impossible to happen and still have a "Europe"
    • DF
      Dave F. | Contributor
      11 July 2019 @ 19:25
      Hi Frank.....not following you - 'we have heard what' so many times?
    • DR
      David R.
      12 July 2019 @ 21:20
      I suspect Frank means that we've heard a bullish thesis for EURUSD a few times elsewhere before, and the thing is that when EURUSD rises, the European economy reacts poorly and threatens EU stability so the ECB then "does whatever it takes" to hold it together and EUR drops again... rinse & repeat. I sympathize with that perspective, but I think Dave's trade will nevertheless work for awhile as his technicals are spot-on, plus the US economy is seemingly decelerating faster this year than elsewhere (notwithstanding one NFP outlier; most US data has been horrid in 2019 as proven by the collapsing Citi Economic Surprise Index for US lately)
    • DF
      Dave F. | Contributor
      13 July 2019 @ 13:41
      David R - if your observation about Frank's comment is correct, then, sure, I understand his view. But I am talking about a 'trade' not an investment here. FX volatility and persistence of moves is far TOO LOW to be coming up with grand forecasts. Place the trade and manage accordingly. Most FX trades nowadays are merely picking a few pips up here and there....waiting for that next big move
    • DR
      David R.
      15 July 2019 @ 16:10
      Hey Dave, that's why I asked about other crosses to USD than EUR. For example, the Loonie and Swissy made big moves. So have some of the EM FX like RUB, MYR and THB. Happy trading and I look forward to your next great video as usual.
  • BH
    Brad H.
    11 July 2019 @ 15:53
    Whats the best ETF to play this trade? FXE?
    • DF
      Dave F. | Contributor
      11 July 2019 @ 16:48
      FXE would be fine