The bottomless pit
Written by:
Skerdian Meta
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Wednesday, March 11, 2015
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2 min read
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Last updated: Wednesday, March 11, 2015
The ECB Quantitative Easing program which started on Monday is in full swing. In the beginning, the rumors were that the purchases were small, around 30 to 50 million Euros. But the ECB member Coeure said yesterday that the ECB bought more than 2.5 billion Euros worth of assets on Monday and will keep the daily purchases at this level. After all, if you aim at reaching 60 billion Euros a month you have to buy around 3 billion a day, otherwise you won´t reach the target and the desired effects will be limited.
In the weekly review and in Monday´s post we mentioned that many analysts were unsure of the impact that the QE program will have on the Euro. We said that there will be more Euros in the market but 60 billion extra a month is nothing compared to trillions and trillions that already exist, so the impact on the Euro seemed limited a few days ago. Well, the market has decided that it wants to see the Euro reasonably lower and the Euro has been totally smashed. We missed most of the action in the Euro pairs, apart from a EUR/GBP sell signal on Monday and another sell signal on EUR/USD yesterday, which gave us a 50 pip profit combined. The moves have been very quick and the support levels in EUR/USD have turned into resistance once they were broken. So, we plan to sell any Euro jump today. EUS/USD is below 1.06 right now and 1.0620 will be a good place to open a sell signal. If we move above that we´ll consider selling when the price reaches the 20 MA. We´ll also open a sell signal in EUR/GBP if it reaches the 0.7050-60 area, because you just can´t be wrong if you´re on the short side of the Euro.
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
