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EURUSD - River Theory

Posted: Tue Mar 06, 2007 11:00 pm
by downrivertrader
As anticipated, price traded up to test the River Level at the 3132 (High was 3130). The supply here capped the topside today. Note that the River level is now at 3145 based on yesterday's volatility.
I remain overall bullish on this pair and continue to hold my longs into the current Transition Level. I am continuing to watch the 3063 level as indicated on the PDA for March on this pair. If we settle below this level I will exit my longs. Please take a look before making a plan to trade.


So what now?

Expect extreme volatility at the Transition Level as bulls and bears battle it out. Plan your risk with care and do not hesitate here. Your goal is to capture the directional flow away from this level as it will be the catalyst to our next strong move. The ECB rate announcement is on Thursday and this may add to indecision.


Aggressive short term traders can set up shorts on a move into the transition area at 3132. Risk should be above River at 3145 on an intraday basis. Targets for successful shorts are 3069, 3052, then 3007.


Longs can be established on a move through the Transition and River Level at 3145 with risk on a significant daily close back below 3132. Upside targets are 3220, 3242 and 3353.


As recommended yesterday, continue to focus on the 3132/45 area to indicate the next directional flow. A move above here is very bullish.


SHORT TERM NEUTRAL UNTIL THE 3145 RIVER LEVEL IS RESOLVED

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Posted: Thu Mar 08, 2007 12:15 am
by downrivertrader
Today the EURUSD pushed through strong supply in the Transition Level at 3132 and also pushed through yesterday's River Level at 3145. We are still working to resolve the River Level and I anticipate building value into today's ECB rate announcement and the now famous Ms. Trichet press conferences. Expect volatility during his press conference and plan accordingly.


I remain overall bullish on this pair and continue to hold my longs into the current Transition Level. I am continuing to watch the 3063 level as indicated on the PDA for March on this pair. If we settle below this level I will exit my longs. If we settle significantly below transition, I will likely lighten my long positions also. Please take a look before making a plan to trade.


So what now?

As I indicated yesterday, your goal is to capture the directional flow away from this transitional level as it will be the catalyst to our next strong move.
Yesterday I recommended to establish longs on a move through the Transition and River Level at 3145 with risk on a significant daily close back below 3132. Upside targets are 3220, 3242 and 3353. If you established longs on today's move then stay long. Short Term Traders can establish new longs ahead of 3132. Risk should be with a daily close below this level and targets are the same as established longs.


Continuing to trade above the Transitional and River Levels is very bullish.


SHORT TERM NEUTRAL UNTIL THE 3162 RIVER LEVEL IS RESOLVED


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EURUSD for Monday 3-12

Posted: Sun Mar 11, 2007 3:25 pm
by downrivertrader
As we head into a new week, I am continuing to watch for a new directional flow for the Euro currency. If you just use a commonsense look at this pair and many of the currencies, you can attribute the consolidations and lack of trend to uncertainty in the market. Our global central banks are at various stages of their monetary policies. Looking at the ECB...will they continue on their path of tightening? Or has vigilance escaped them for the moment. They don't know, so how should the market know? We just continue to focus on value since we have no control over the market direction. As many of you know, I watch the order flow on Euro Futures which are traded on the CME globex. I am usually able to see central bank and other large activity here. It has been noticeably absent in my opinion of some time.


If you recall on Friday, I had suspected we may see a buy extreme on a drop in value down near the 3063 level. Well the drop in value came and buyers emerged, but it was certainly not overwhelming. I remain long as we build value in the Transistion area and continue to focus on the 3063 level as my risk area. This area is eveident in the Monthly Price Distrubution Chart. I continued to add to my long positions on Thursday and Friday as the market gave me the opportunity at a good value.


Okay back to River Theory....


We closed on Friday under the Transition Level of 3132 and the River Level of 3142. The close was not significant in my opinion and only a few ticks under as we continue to resolve this key area. This close could be our first warning sign that a move is coming. Monday's price action should be key at determining the directional flow away from this level. Remember, our goal is capture the move away from this area. Ideally, we would like to take 100% of Zone 1. This would represent a move from 3132 to 3353 or 221 ticks.


If you are long stay long, using a close below 3063 as your risk. Traders can look to establish new longs on a move above River at 3142. Your short term risk level should be below the Transition Level at 3132. Targets are 3214, 3242 and 3353.


I do not recommend establishing shorts until the 3063 level is resolved. Again, refer to the Monthly Price Distribution Chart for guidance. If you are inclined to set up shorts, use the 3132 level as your key. Risk would be above the River Level at 3142. Downside targets are 3069, 3046 and 3007.


NEUTRAL UNTIL RIVER LEVEL OF 3142 IS RESOLVED


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Posted: Mon Mar 12, 2007 2:09 am
by RuGO
Nice call on this pair as we seem to have a zone of confluence and confirmation of an H&S formation near 3060 (4-hour charts). Bullish sentiment should/could remain intact if we manage to stay above this level.

Posted: Mon Mar 12, 2007 11:44 am
by downrivertrader
Thanks RuGo. You know the one thing that I find is that when a pattern is recognized by the masses it many times won't work. WHy? It is already priced in. I had two emails this morning in my in box and one from a news service discussing the H&S on the EUR. Take the other side!!


Is that you in the picture?

Posted: Tue Mar 13, 2007 3:06 am
by RuGO
downrivertrader, "Take the other side!!" is a very good advice, however I did not participate in this one... I still need to work on that part!

As for the mug shot, yep managed to stay off the Most Wanted list (for now)...