Daily December Euro Pattern, Price & Time Analysis
The December Euro appears to be “resting” this morning as traders anticipate the release of the Euro Zone plan to perhaps solve the debt crisis that has been plaguing the region for over two-years. Today’s tight trading range reflects the uncertainty in the market. Traders can deal with the risk in the markets because they can lay it off somewhere, but uncertainty is very difficult to work with so many traders simply decide to stand aside.
In my opinion the Euro is setting up a bull trap triggered by a “buy the rumor, sell the fact” situation. Traders know an agreement will be struck so the bet is on how big of a commitment the Euro Zone officials make toward resolving the debt crisis now. Traders will be looking at this deal with a fine-toothed comb, poking holes wherever they can. At issue is total funding for the bank rescue, an increase in the lending limit for the European Financial Stability Fund and the write-off that lenders have to take on their Greek debt. Traders know a deal is coming, but are not willing to speculate at this time on whether the deal will be bold enough to have a lasting effect.
Technically the December Euro is trading inside of a major 50 percent to 61.8 percent range. Based on the range of 1.3142 to 1.4558, the retracement zone is bounded by 1.3850 to 1.4017. A breakout above the upper level is likely to trigger a further rally to the downtrending Gann angle at 1.4148. On the downside, the uptrending Gann angle at 1.3782 is a potential target.
Once again the fanfare leading up to the release of the European rescue plan may be overblown. While most traders agree there will be a positive development, it may already be priced into the market. This means that short-traders will be waiting for a euphoric rise to pounce on. Traders have to be careful about buying strength unless the actual rescue figures are spectacular. Otherwise, investors are going to be asking “what have you done for me lately” and move on to lingering issues in Italy, Spain and Portugal.
