Euro

Targets well below these levels remain valid, but for now we should focus on a bullish impulse leg that has developed this week on the lesser charts. It projects to 1.2882, a Hidden pivot that would become an odds-on bet if and when the futures take out its p sibling at 1.2798.  Yesterday's high missed that mark by nine ticks, but if that should change overnight, night owls might look to 'camo' their way aboard on a B-C pullback beginning from somewhere between the two peaks, as shown.

The chart reproduced alongside yields a worst-case low of 1.2507 for the Euro over the near-  to intermediate-term.  The downtrend could breach that Hidden Support and go lower, of course, but it seems unlikely that this will occur without a tradable bounce from very near the pivot. That is not an exact number that can be used to bottom-fish with the usual penny-ante stop-loss, by the way, since it comes from coordinates taken from a composite chart. Still, our target should be close enough for government work if we want to bottom-fish with camouflage cover. More immediately, we should be look for ways to get short, presumably at the p midpoints and d targets of minor rallies. If there's any interest in doing so in the chat room, I'll put out some "live" numbers in real time.

The most interesting thing about the euro's chart is that it does not spell disaster.  Look and see for yourself that a crystal-clear ABC pattern points no lower than 1.2841 or perhaps to 1.2507 if you max out an even bigger pattern on the daily chart.  Contrast that with noveau-ruinists' pronouncements that the euro will eventually trade at parity with the dollar. Perhaps. But that day still looks like a long way off.  In the meantime, for reasons on which I speculated in a recent commentary, Germany and a few other shtarkers will act as the euro's keeper of the flame after the PIIGs renege on their debts.

[The commentary below elicited quite a response, so I'm letting it run for a second day. Wednesday's commentary will feature two very important trading tips for permabears who have been trying for years without success to short the elusive Mother of All Tops. If you're interested in learning the "parlor trick" that we used on Friday to get short the QQQs ourselves within a hair of the intraday high, click here. And if you'd like to have these daily commentaries delivered to your e-mail box free of charge, as will as free access for a week to all of Rick's Picks services and feratures,  click here. RA] Who’d have believed that the word “hypothecation” would grab the financial world’s shakers and movers by the balls last week, whirl them round-and-round, then dash their cynical pretenses of “saving” Europe against a stone wall?  Click here to read the article on this topic at ZeroHedge if you haven’t done so already. And then send it to everyone you know. We did, with a warning that the collapse of the banking system is no longer merely possible or likely, but unavoidable. The article takes pains to explain why in terms that even the layman can understand. It will undoubtedly have created quite a stir not only among the broad readership of web sites that linked it, but among those charged with the task of further delaying Europe’s financial collapse. The spinmeisters and policymakers have been doing their utmost to obscure the details of the supposed rescue effort, since the better those efforts are understood, the more absurd they become. And yet, as our colleague Bill Buckler, editor of The Privateer, points out, the clamor to “solve” Europe’s debt problems with trillions of ginned-up printing-press euros or dollars is nearly universal.  One might think

This demo was done at the invitation of TradersLog.com and starts with a brief explanation of the Hidden Pivot Method. We then took a close look at some key charts that provide clues concerning how the global financial crisis might play out. Our focus was on long-term charts for T-Bonds, U.S. stocks, the dollar and the euro. The conclusions we drew are somewhat counterintuitive, most particularly a prediction that the euro will not crash when the PIIGs eventually default.

This Thursday morning, December 8th, Rick will be conducting a webinar focused on the state of global markets. Among the specific topics of discussion will be bellweathers such as the Dollar Index, T-Bond futures, the euro and index futures for the broad averages. During these events Rick examines a variety of issues with an eye towards providing actionable trading advice to attendees. Register now for the free event. Space is limited. Reserve your slot now.

Yesterday's coordinated action by the central banks to lower dollar-swap rates sent the euro into a bullish spasm. The move was strongly impulsive on the hourly chart, but we'll reserve judgment on the likely longevity of the move until we see how the futures behave near the tentative 'p' midpoint of the pattern shown, 1.3551. An easy move through it would portend more upside to at least 1.3681, its 'D' sibling, but it would also infuse the hourly chart with new bullish energy for a possible push toward 1.40.

Sellers have breached a 1.3242 downside target that I'd originally flagged as a back-up-the-truck number.  The overshoot was 30 ticks, and although you still could have easily caught a profitable bull trade using camouflage, initiating a long position shortly after 9 a.m. EST from 1.3240, the fact that the low had already overshot my downside target by 30 ticks implies unambiguously that the euro has significantly further to fall.  My new target is 1.2933, and it comes from the daily chart, where A=1.4450 on August 29.

An onslaught of selling awaits the euro, according to the hourly chart displayed in the inset. With a 3-cent fall in the offing, we should look aggressively for ways to get short (and to back up the truck to buy 'em if and when the 1.3242 downside target shown in the chart is achieved).  If you call up a 5-minute chart, however, you'll notice, that as yesterday's downtrend matured, this vehicle became increasingly difficult to short, stopping out numerous point 'C' highs before resuming the downtrend. This implies that if you do any camouflage trading, you'll need to follow the rules rigorously. We'll take a closer look at the next impromptu trading session, so stay tuned. ______ UPDATE: We'll put this one on the back burner for now, since the daily ups and downs of the Eurocrisis have turned the euro's promising-looking downtrend into trendless mush.