Personal Announcement & Mr. Euro

The dollar seems to be in a bad mood after Thanksgiving weekend and I do have a very personal announcement to make.

Last week after the OPEC meeting, oil prices tumbled to their five-year lows of around $65/barrel. Several forex market participants, along with most OPEC member nations, were counting on the oil cartel to reduce production by 5% or 1.5 million barrels per day. In doing so, oil supply could be limited, which would then put an upward pressure on prices. In a surprise move, the OPEC refrained from making any changes to their production target, as the cartel failed to reach an agreement.

Oil prices were up Monday and accordingly the reversely correlated US dollar was down apparently not only because of the oily shenanigans but also by rejection of the USD/JPY pair at market open on Sunday night after Japan was downgraded by Moody. Mr. Euro took this opportunity as he dances against the US dollar and jumped up. As I explained last week, a quantitative easing in the euro-zone is still very much on the table at least among the majority of investors. Probably more important than this though is that they will not move forward with it until their other current programs are fully matured have made their way through the ECB’s system. Some ECB members have mentioned that a QE will not occur if other programs balance sheet is back towards the early-2012 levels. Thursday could be seen as the big day, with the ECB announcement which could be a real risk to the strength of Mr. Euro. From a technical point of view, it’s all about that wedge.

On the daily dance floor the pair remains within the falling wedge though it’s now teasing its upper level while dancing below the Ichimoku cloud. So with Super Mario’s QE actualization coming up, I think it’s more about “when” we could see the reversal happen once the pair breaks above the falling wedge and moves towards the Ichimoku cloud. A break above the 38% Fibonacci level at 1.2930 could confirm the long term bullish outlook for 2015 which could bring the European currency back up to the 1.31 level against the US dollar. Otherwise, our bearish scenario which probably could happen before the reversal sees targets at 1.2260 and 1.2100 in extension.

i did promise a personal announcement and I am going to do it right now… I’m engaged! Not to another currency pair on the forex dance floor but to the real Mr. Aussie with the real Aussie accent so now I basically have have another diamond in addition to the Invest Diva diamond that I created for myself and for all my fellow responsible traders in our education course. Thanks for watching. Invest responsibly and I’ll see you next week.

Intraday Forex Technical Levels

AUD/USD 4-hour: Rebounding from the 23% Fibonacci level.

Invest Diva positioning: Short positions below 0.8415 with targets at 0.8318 and 0.8102 in extension.

Technical reasons why: The pair is rebounding from the 23% Fibonacci level and heading down to the resistance level at 0.8415 below the Ichimoku’s cloud. The RSI is moving down below the neutrality area.

Alternative Scenario: Above 0.8415 look for further upside towards 0.8528 and 0.8598.