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Forex Trade Signals and Setups Oct. 3rd
EURUSD – Greek Default Looms
As it becomes more and more clear to the general public what has been known to the more savvy investors and financial professionals that Greece is going to default, the increasing weight of this situation is having an effect upon the Euro and the entire region. Go figure Greece is not going to meet its budget targets. How can you do this by increasing taxes and austerity measures, laying off employees combined with no growth? You can’t, and that is why they will not meet their budget targets which only puts more political and social pressure on any country foolish enough to bail them out. This is what happens when a country which lied about its actual financials gets into a Eurozone which actually made their main business (tourism) less competitive. Why? Because when they adopted the Euro, now for the same price you can visit the South of France instead of the Greek Islands which used to be much cheaper under the Drachma. Take that away, along with some corrupt politicians who fudge the budget, along with lots of Greeks who do not pay their taxes into a social system and guess what? Greece is not hitting their budget targets. Go figure!
Anyways, this has put immense pressure on the Euro and we expect it to continue to weigh as people start to realize they cannot put a little band-aid over shark bite which has taken out half your leg. The politicians who are helping to enact the policies are just as worried about being re-elected as they are in dealing with the situation which is an incompatible situation to enact real financial reform instead of throwing good money (your tax Euros) after bad money (Greek debt).
With that being said, turning to our Ichimoku charts, we can see the EURUSD has been under the Kumo for a long time communicating the consistency of the selling pressure. The most recent bounce off the lows of 1.3400 from last week ran into the 50% fib and Kumo Flat Top which rejected price soundly with a failure to close above the Kumo. Since then, the pair has medium Tenkan-Kijun cross which has resulted in some considerable downside selling since the cross over 150pips. The Kumo is thinning suggesting there may be an exhaustion pull-back of sorts, but with the Greek situation starting to convince more and more people a default is on the cards, we expect pullbacks to be met with further selling so watch for another Tenkan-Kijun cross for another leg down.
Spot Silver – Forming a Bottom?
After the CME hiked margins on precious metals, along with the mutual fund redemptions and hedge fund margin calls, Silver took a beating dropping over $14 in a flash. Since then, its formed a massive pinbar on the 4hr time frame which we blogged about last week and has since, the lows off of $26 have held.
Price action since then suggests a possible bottom may be forming around the $29 level so traders can look for price action triggers off this level with stops below and looking for targets around the 20ema on the 4hr time frame and possibly $33 which is the swing high from Sept. 27th.
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