IS IT TOO LATE TO SHORT THE EURO/FXE?
As a large time frame trader, my tendency with the Euro or with its stock proxy FXE, has been to short it on strength given the cycle of ECB easing and Fed tightening. The shorts I have taken have been been few and far between since early 2015, having all been taken around EURUSD 1.150.
Given the fact that we are at or near long-term support (the Oct 1997/Mar 2015 lows) and the near-term downside target remains subject to discussion, I would be hesitant to short from here since the reward is somewhat indeterminable, in spite of the fact that the next "obvious" swing low would be the Oct 2000 lows at .823 (although a number of traders are liking parity from a purely psychological standpoint). Naturally, both targets would pose juicy rewards for the longer term trader who's willing to hang in there through the probable Dec Fed rate hike and probable rate hikes thereafter on top of possible further ECB easing or, at the very least, maintenance of a dovish tone.
My hesitancy to short here derives from the fact that the Euro has staged substantial rallies in response to short-term exogenous events (May 2015 to 1.146; Aug 2015 to 1.171; May 2016 to 1.161) before tumbling precipitously. For my part, I'm going to wait for another one of these "exogenous event" spikes to short rather dipping my toe in here on a break of 1.05 support, since the ultimate "short-term" destination remains to be seen ... .
Given the fact that we are at or near long-term support (the Oct 1997/Mar 2015 lows) and the near-term downside target remains subject to discussion, I would be hesitant to short from here since the reward is somewhat indeterminable, in spite of the fact that the next "obvious" swing low would be the Oct 2000 lows at .823 (although a number of traders are liking parity from a purely psychological standpoint). Naturally, both targets would pose juicy rewards for the longer term trader who's willing to hang in there through the probable Dec Fed rate hike and probable rate hikes thereafter on top of possible further ECB easing or, at the very least, maintenance of a dovish tone.
My hesitancy to short here derives from the fact that the Euro has staged substantial rallies in response to short-term exogenous events (May 2015 to 1.146; Aug 2015 to 1.171; May 2016 to 1.161) before tumbling precipitously. For my part, I'm going to wait for another one of these "exogenous event" spikes to short rather dipping my toe in here on a break of 1.05 support, since the ultimate "short-term" destination remains to be seen ... .
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