Break Through Monday

Despite a strong U.S. jobs report the never ending drama in Europe and especially worries over a major political shift in Italy seem to be the primary concern among investors right now. As always hope springs eternal and after painting a 10-month low of 1.1510 early last week the Euro has managed to extend some late week gains versus the Dollar since the Sunday open.

I definitely don’t want to come across as too cynical or self serving, given the fact that I currently live in Europe but earn in Dollars. And yes, a weaker Euro does benefit my lavish lifestyle as it affords me increased buying power. I shouldn’t complain too much as living cost over here in Spain are considerably lower than back in the States, and don’t even get me started on real estate or health care.

That said it never made sense to me that the Euro was trading at a premium against the Dollar as the entire continent has effectively turned itself into one big smoking political powder keg over the past few years. I can barely glance at the news here in Europe without shaking my head in utter disbelief.

So I just don’t see how the European Union and by extension the Euro currency, as it is managed today, will be able to survive the coming decade. But I’m pretty damn sure the ole’ greenback will still be there, irrespective of the perma-bearish smut you may be secrectly reading over on ZeroEdge (yes, you know who you are).

Okay back in the here and now – we have a picture perfect inverse H&S pattern on the EUR/USD including a complementary fake out dip below the 100-hour SMA. The spike low it produced would have been a nice entry earlier today but like most of you I require sleep.

So I’ll be looking for a possible retest which unfortunately is looking less and less probable. The highest odds at this point support a little short squeeze higher until investors find another reason to be worried about Italy.

Interestingly the USD/JPY is not showing any weakness and has advanced to about the 0.5R mark in my long campaign. Too early to advance my stop to break/even and thus far it remains < 108.113.

Despite momentary Dollar weakness a falling Yen of course has imposed drag on precious metals, and in particular gold. As you recall I’m positioned long here as I decided to pit gold versus the Yen last week. So effectively I’m net neutral between those two and am waiting for a decisive break out on either side.

The E-Mini is finally advancing > overhead resistance and if it can hold the line we ought to be positioned for continuation higher. Yes, there may be another retest of the 100-day SMA, which would be a great long entry opportunity, and that’s probably why we won’t get it 😉

Bonds have pulled back quite a bit and after rolling into the September contract I’m now waiting for a more pronounced floor pattern on the hourly panel. The daily panel is coming into focus now as the 100-day SMA is about to flatten out while the 100-day Bollinger is starting to compress. This should get really interesting come early summer.

What Happened To Spring?

Speaking of which, the weather has been miserable most of last weekend and with summer and with the summer vacation season starting this month I am beginning to wonder what the heck happened to spring. We didn’t really have one this year and from what I’ve seen online the weather has been equally disappointing in the United States. Crappy tape mixed with crappy weather. I hope the second half of the year will be a bit more fun.