01 July 2010

Fundamentals and EUR

Well there was the fundamental change which reversed Euro's valuation. To go down from where it was would need a strong fundamental push down, but it got weak fundamentals for up, and shot up. But what are the real fundamentals supporting a rise ? Technically the market likes to spike a low, rise, spike down, not reach the low and shoot up.

This is the basis of the bullish divergent bar, the beginnings of an Elliott wave. The probe is the problem, as it reverses this and finds a new valuation lower. Normally it takes a fundamental to override technicals, in this case today there was weak support for the technical move up on the pattern and this caused a program cascade up, those stacking candles.

It is all about triggering reverse trades from an extreme. That is what I warned about watching for if you trade on fundamentals in forex.

Anyway the surge is now hitting structure from mid May (go left and see on 1 day as I outlined). The point I am making is on real economic fundamentals, long term the US and China are strong. Apart from Germany, where is the inherent strength of Europe (i.e. not strength dependent on China and the US) ? And what are they doing which is not debt related and what does debt do to a currency ?

That is not a straightforward question, remember what I said about the rise of Euro, on hot air, debt...as always Euro rises still on on the economic resurrection of the debt inflationary economy. $ rises in the resurrection of the power of company growth, real economic growth. That is how I would describe the core of the world economy.

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