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EURUSD has not bottomedHello everyone! As you've already noticed from the title, I don't believe EURUSD has bottomed. Yesterday I shared an idea about why I think the DXY hasn't topped either, and as the DXY mostly consists of EUR, it is impossible for me to think that the USD won't strengthen vs the EUR. However in the short term EURUSD could go higher, and I could even see it go up to 1.10, without that meaning that the downtrend is over. The fact that the market tested 1.03-1.04 again is pretty bearish, and the bounce is mostly due to the fact that things got pretty extreme. Essentially the market got extremely oversold, and therefore the most important support actually held. The problem though is that the structure is clearly bearish, as double bottoms tend to break and we haven't seen any significant higher highs and higher lows yet. Getting above above 1.045-1.05 was the first key indication that the bounce would have legs, as the market reclaimed the Yearly S3 and Monthly S1, along with the horizontal support. Now it has reclaimed the 1.064 level and therefore I wouldn't be surprised if it properly retested the 1.08 breakdown level. I also wouldn't be surprised if it rallied up to 1.095 to sweep the highs there, as that breakdown wasn't properly retested and the highs not properly swept. To me this is more of a dead cat bounce for the Euro which got extremely oversold, while rates in Europe could go higher and rates in the US lower. The case for higher rates in the EU can be justified a lot more easily that ones in the US, but at the end I believe the ECB is in a worse position than the Fed. Why? Because they need to support all the weak countries, while European energy is too expensive and the population a lot older. Hence the 1.08-1.095 is great for shorting, and as long as the market doesn't close above 1.12 I remain bearish.
Short
by BitcoinMacro
SXLK: time to take profitThe ETF SXLK has been providing an easy access to the US big techs for the European investors, allowing us to piggyback the insane bull run over the past few quarters. However in the recent weeks, it's showing some weakness. While the (5) waves up off the March 2021 low looks complete, the daily RSI shows an downward trend. Above all, the weekly RSI and stochastic is leaving the overbought zone, indicating an exhaustion of the rally. When was last time that this happened? It was the covid crash in 2020. I'm aware of the small sample size due to the rather short existence of the SXLK, but I'm certainly willing to pay attention to it. If you take a close look at the XLK, the American OG of the SXLK; top two constituents AAPL and MSFT have signaled potential multiple top, while number 3 NVDA is already in a downward channel. As those three have a combined weighting of about 50% in the XLK, when they head into correction phase, so will the SXLK do. Currently I'm eyeing 66-69 as initial correction target, that is the retracement range of wave (4), and the volume wedge around 67 on the daily should also provide some support. The bounce of yesterday 12-Jan provides an exit opportunity, it's prudent to reduce exposure and/or buy protective puts. Let me be clear that the aforementioned are well run companies, and AAPL and MSFT also pay dividends and buy back shares. Long term I'm not bearish for them, in the short term however, I doubt the high multiples are still justified by the growth. I generally do not track US stocks closely and I prefer using ETF for exposures in the foreign markets, so DYOR. And maybe show some love for the European cyclicals/values?
EURONEXT:SXLKShort
by EuroStockOption