As I have been saying previously, to me, US dollar is bottoming, and most xxxUSD pairs are topping. Last week analysis for NZDUSD is still valid, went up a bit, but still didn’t even touch 7000 or came close to it. I thought it might spike up before a drop, but doesn’t even have power for that, it seems. So selling is still fine at the current levels, no matter how bullish the chart may appear to you. Same goes for EU and GU, where I am actually surprised people are still buying and from what I am reading on the forums, people take 1.20 or higher on EU as something that has to come. Well, all I can say is, good luck with such trades. Not only are EU longs accumulating negative swaps each day, to me the chart looks like it can break down at any moment. And with retail so convinced about longs, they will be adding longs on the way down…first at 1800, then 1750, 1700 and finally at 1600, where I expect most of the retail world to be long and strongly bullish, expecting another leg up…which may never come. If you look at the monthly chart, the targets aren’t up, they are down…and they are much much lower than where we are now. So why chasing longs for 50-100 or even a little more when the downside is so much more scarier? Being trapped in longs, when this thing breaks down, your account would be eaten up just by the negative swaps hitting you daily…even if we keep ranging just couple hundred pips lower. Not saying EU will break down and crash, but why take the risk, if it could? Fundamentally it will not only make sense, but it would even help the economy to recover faster. I am expecting a currency war next year, as 2021 will be about recoveries and nobody wants a strong currency for that, the weaker, the better.
Same story goes for GU, a lot of convinced bulls on the market, buying pound into the biggest uncertainty of the last few decades, the brexit. In january, UK is out of the EU, at this moment it doesn’t even matter if a deal is agreed upon, which it most likely will, because it would be a last mine half-baked deal, not making things any better for the UK, or EU for that matter. So what are the options? A deal will be announced…GU will spike up, can be even a few hundred pips, and that will be it…soon after market will realize it makes no sense to hold pound into 2021 and it will be sold out. And the second option…no deal…and a pound crash that will burn many accounts. So whats the point to look for longs at 3300? To hope for 3400? Or even 3500? And risk a crash towards 1.20 or lower? I will skip longs on GU at these levels, definitely above 3000.
Finally, lets take a look at UCHF, which is just EU reversed. I made the prediction below, early this year…when everyone was buying UCHF between 9700-9800, I had a feeling it will go down first, take out all the bulls and eventually turn up and strongly reverse upwards, for a longer term move. Half of it is done now…so the question is, will it work out in full? If it does, EU bulls will be in big trouble.
And one last thing…next week is Thanksgiving week in the US…in my experience, its not easy to trade, so if you are not experienced enough, better stay out. It might go in one direction all week, leaving many people trapped, whichever direction it decides upon.