Greece bailout: What will happen to the EUR-USD?

There are hot media speculations about Greece bailout plan to help the country to restore its financial credibility. An estimated of €110 billion Euros bailout is expected to be given to the Greece government by the help of European Union fellow members and IMF. Direct correlation of this event to the forex market movement give me a great concern, as i am trading on the bearish trend all along at the moment.

So the main concern here the impact of the financial aids to the movement of EUR-USD bearish trend. From technical analysis point of view i expected at least two possibilities that may happen when the bailout is pass to the Greece government.

1. Strong upwards movement that will defy all the indicators that helps to keep the bearish trend. That means there will be long sharp spike upward and the aftermath of this scenario either permanent or temporary. If the result is permanent Uptrend will likely to start from here or otherwise downtrend will continue.
2. If the figure of the bailout is lower than expected then there could be short sharp spike and the market will then quickly normalize to continue its downtrend direction.

This is serious and dangerous situation to be in as traders are very cautious about taking their money from the market to avoid unexpected losses. Strong market turbulence will affect the EUR-USD at some point, so be wary and keep up to dates with the financial news and economic calender.

Note: In certain occasion the market may move ahead of the event or sometimes during the event announcement itself. So nobody can really tell exactly when the big market traders will make their move. In this case i will wait for the first move and analyze indicators position to make ride along with the next move.

ADP Non-Farm Payroll: Pause point for EUR-USD

Strong bearish signal has pushed the EUR-USD deep to oversold position, but is it going to stop soon when the Euro Zone market open or continue going down until the US session open during the ADP non-farm payroll news release.

All technical indicators such as MACD and stochastic still showing fairly strong bearish in all major time frames (daily, weekly, monthly). Approximately 400 pips or about 400% down from the previous Monday position. This means the long-term downtrend is very much underway with minor hurdles along the way.

Using the oversold position and Indicators signal we can assume the following.

1. Oversold position = The market is looking for correction as some traders might be taking profits on this level
2. MACD & Stochastic Down = It will go further down if traders choose not to take their profits yet.

Based on MACD and Stochastic signals i have the feeling that the euro-dollar may continue to move down even when the Euro Zone market open. This is because some traders might still believe in the signals given by the indicators since it is very strong and ignore the correction hint. However during the ADP Non Farm payroll news release the market is expected to have a brief pause here. And this could be it, the point of correction will take place. So we will see what the European traders will do.!!

Breaking News - Euro breakup talks!!

The Greece financial crisis and the spiraling impact on other fellow members of the European union has led to the growing speculation of potential disintegration of the Euro currency. An estimated of 860 billion-euro debts total combined from all the European Union led by Greece is big financial dilemma that seems to have no solutions at the moment.

Based on Bloomberg report the main reason caused this problem is the uncontrolled taxes and spending among some of the European Union country members which led to mounting debts.

If the integration of Euro indeed happen this would be a historical failure of one of the greatest idea in Europe financial history. And in fact the Quote for EUR-USD that we all love the most will no longer exist in forex trading.

I just hoping that all European Union members will find out a good solution to this problem and maintain the stability of Euro. This is because EUR-USD is the most stable and highly predictable to trade in forex.

Fundamental Analysis Dilemma

Experience traders usually rely heavily on the fundamental analysis more than technical in their daily trading. This is because they have already study for so many years about the behavior of market movement affected by each of the economic data. Despite of their overall success there are certain times they still at least incur some losses. And their only solution to cut that losses is by putting a stop loss limit so that the market will not slide away too far of the expectation.

As for the beginner forex traders please don't mess up with the economic data if you totally have no idea how it works. However I would suggest take your time to make a thorough study in order to build your own experience on the market behavior for each of the economic data such as interest rates, non farm payrolls, Gross Domestic Product (GDP), Consumer Price Index (CPI), etc. These are the unexplainable facts that you cannot find in any forex books written by any experts because they don't know the effect on the market either. This is where you have to be your own experts in forex trading.

The very problem of fundamental factors is because they are so unpredictable especially its immediate effect which can drive you crazy. Take for example during non-farm payrolls data release, some traders consider it as profitable and some others see it dangerous time of trade. The fact is no one really knows and when it happens they either could be wrong or right. No matter what figures comes out whether it is as expected or not the market still can go crazy moving at any directions i.e. ups, downs, or up and downs defying all the technical rules. As a result some traders will make huge profits in matter of seconds i.e. 200 pips or more and others may suffer great losses. Some can even profit in both direction to double their pips earning.

Now in this topic I will discuss how can we use technical advantage to solve the problems of fundamental factors dilemma. And for that reason I am not going to discuss how to make profits in both directions or straight win on the first setup but rather to identify the point of overbought/oversold positions. Furthermore I will not guarantee you will make profits because the market will be very fast moving and the likelihood for you to miss the boat is very high. In this case if you miss it just let it go.

In order to make discussion easier to understand i am going to use 4 hourly time frames which is one of the most difficult for the market to break its resistance without solid support. During non-farm payrolls data or significant economic data the market may shake vigorously without any direction. The quicker it moves the weaker the foundation of the movement. Most often it will pass the resistance level in this case 4 hourly time frames and create overbought/oversold positions. You can see this on the Bollinger Bands indicator. So this is chance for you to setup your position, but don't do it too quickly when it is still moving underway and let it go slide further away from the resistance level to create super overbought/oversold position. As it is reside far outside the B. Bands resistance lines then just setup your position.

At this point even the most powerful trader with most money including those brokers traders use to call "bucket shop" will not dare to try any further move because it is already too far from the moving average.

The market will eventually make corrections to normalize the overbought/oversold situation to the ideal position where the market supposed to be. Or in fact you may get lucky if the market make total reversal you will make good profit for the day.

I am sorry for unable to provide visual image of the non-farm payroll data because it happens less regularly at this point of time. Therefore i am unable to get the recent chart. You will find out yourself someday and check economic calender here at forexfactory