Falling bags: reversal signs. Eur / Usd at the end of the race?


Below is the interview with Pietro Paciello, CEO and Chief Analyst of Pro Markets Sagl, Asset Management Company, to whom we asked some questions about the situation in Piazza Affari and the strategies to follow for different titles.
Pietro Paciello awaits you on Monday and Friday at 4pm with the Market Talk OPENING BELL – NewTraderLab. For info click here.

The euro-dollar also travels higher today, so much so that it goes beyond 1.11. Is the race going to continue?

The upward trend of the euro-dollar is almost surprising, but it must be said that it is characterized by a graphically unexceptionable departure.

There has been very evident dynamic support for everyone from whom the upward movement started and not only surprised by the fact that the euro-dollar is rising, but by the violence with which it is doing so.

It must be said that today the cross has arrived on the only target that can be found in this area at 1.1145.
It is a static level touched on March 27 last, since then there was a retreat of about two figures.

In the absence of dynamic technical-graphical references, the 1.1145 level is very interesting and I am positively surprised to see that the euro-dollar has hit it perfectly.

For now the cross has stopped there and this confirms the validity of the level in question which is the only obstacle that we could judge as a potential short-medium term target.

Recalling that at this moment the stock markets are rewarding a weak dollar, and therefore the rise of the euro-favors equity, should a corrective dynamic for the cross trigger from here, I would pay attention to the stock exchanges that could come down.

If the arrival point has actually been reached for the euro-dollar, descents towards the 1.098 / 1.099 area cannot be excluded.

Conversely, if the cross exceeds the maximum just scored at 1.1145, but I would be very surprised if it happened, we can estimate the next stage in the 1.124 area.

I would like to underline that in these days the markets have appreciated a weak dollar as the lifeblood for North American exports.

If the euro were to stop appreciating against the dollar, this would also be a wake-up call for equities.

It is clear that the stock exchanges, especially the American ones, are in a phase of excess buying, but the current US administration continues to support this market force and this has been the dominant key to the Trump presidency.

It is fair to remember, however, that in the past stock markets celebrated the strength of the dollar and not weakness.

Today, with the economic crisis on the way, the United States also needs to relaunch external consumption and therefore prefer a weak greenback.

How do you evaluate the trend of the dollar-yen? What can you tell us about this asset?

Also on the dollar-yen there is a strengthening movement of the greenback, with the cross passed in a few minutes from 107 to 107.6.

A good acceleration especially for a less volatile exchange rate like the dollar-yen which at this point will find a small resistance of short at 107.8, while the strongest cap will be in area 108.

It appears that the market has reversed its position on the dollar which is now being bought on all bases.

If the validity of the correlation observed in the last two months persists, i.e. weak dollar / strong stock exchanges, beware that a strong greenback could call an incoming weak equity.

Gold took the earnings path again after the 1,700 area test. Will we have new hikes soon?

Since we started our chat a few minutes ago, we have started to identify clear signs of potential reversal of the current scenario.

We are seeing a euro that is losing ground against the dollar which in turn is also strengthening against the yen.
Gold a few days ago, when Wall Street hit its new high, hit dynamic short-term support in the $ 1,695 area with extreme precision.

From here began a bullish recoating phase, today it broke the first dynamic resistance at $ 1,725 ​​and would seem to confirm the upcoming risk-off.

This is still the first potential wave, but looking at the scenario as a whole, the strong correlation, even temporal, between the various analysis tools is surprising.

Oil is slowing down its run somewhat, while remaining close to recent highs. What is your view?

Oil was also an asset whose revaluation made fears of a slowdown in the economic cycle underweight.

We can say that in recent times the strength of oil, which has returned to stabilization values ​​pleasing to everyone, has favored a hold on the bullish phase of Wall Street.

On oil, I see a breakout in the $ 34 area and closing below that threshold is a potentially bearish signal.

Black gold, however, at this moment seems to me to be a very controlled asset, that is, they do not run away from it, at least for now.

At these prices it doesn’t hurt anyone and the current one for oil is a zone of neutrality in which we will probably remain for a long period and in the intermarket context that characterizes our analysis, I do not consider oil a very significant asset.

Before saying goodbye, what can you tell us about the stock exchanges? Is recovery at the end for now?

The dynamics that could lead me to think of a risk reversal on the markets, from risk-on to risk-off, I am seeing them now while I analyze the graphs.

It seems to me that the market is turning lower and you are starting to build a bearish reversal dynamic.
As mentioned earlier for gold, the move is initial and may come back, so it will be important to see what will happen in the next few hours.

Judging by the dollar picking up strength, the rising gold and the S & P500 that has punctured area 3.015, we have signs of potential weakening.

These also have a logical justification because we know that Trump will talk about the renewed trade war with China in the next few hours and this starts to discourage the bulls or in any case leads them to consider more cautious positions.

Benefits are then taken and in the days to come we will see if something deeper happens.

The alarm bell will become something more concrete if the S & P500 falls below 2,960 / 2,950 points.

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