The graphic below, direct from the ECB, tells a fairly bleak story.  Rate hikes?  Don’t hold your breath.The EURUSD was virtually unmoved on Draghi’s press conference.  In other words, nothing he said surprised or even resonated with investors. It’s been a while since we devoted a post to the lowly euro, which has gone nowhere since reaching our 1.1281 target last month — for the second time.  But, that’s okay.  Prior to that, it was all over the map.  We targeted 1.1281 in June [see: June 14 Update on EURUSD] as the pair’s rising white channel appeared to be breaking down.

The best targets are a backtest of the falling white channel top at 1.1281 or the red .618 at 1.1186.

It came within .002 of our initial target on Aug 15, then bounced up within .0001 of our upside/backtest target of 1.1734 on Aug 28.  We spent over a month wondering whether it might stretch for its SMA200 when it finally broke down on Sep 27 and plunged to within .0014 of our secondary downside target.

While it’s been an interesting trading vehicle, it’s hard to shake the impression that larger directional moves lie ahead.

continued for members…First, a quick look at the US equity market…

SPX closed just below the white channel top yesterday, but managed to hold its fan line and the SMA5 200 — all together, a positive.It was greatly aided by VIX, which continues toward our downside target(s).But, as we discussed yesterday, nothing has really broken out yet.  SPX would need to reach 2673 in order to break out of the small, white falling channel.Although COMP and AAPL continue to look dismal.  As we discussed yesterday, COMP’s last leg lower could delay until after the new year. The oil and gas picture hasn’t really changed, except that we’re finally seeing CL begin its breakdown.  RB remains above trend and should continue to hold these prices.Back to EURUSD…

The weekly chart shows the pair backtesting the falling white channel after bouncing off the huge rising white channel bottom and backtesting both the red neckline and the top of the falling red channel. In other words, it’s range bound between the rising white channel bottom and the falling red channel, but (for now) respecting the falling white channel from which it recently broke out.

If the backtest fails, and it drops through the top of the white channel, then it has potential to 108.13 – 1.0935 and, if that fails, to 1.0592.  But, I mostly expect the backtest to hold and for EURUSD to bounce up to test the SMA200 around 1.16-1.17 sometime next week.

With the SMA200 on such a slumping trajectory, it will obviously eventually reach the recent trading range.  So, there’s the possibility that the Fed and ECB have reached a truce and are happy to let the pair stay in the 1.12 to 1.17 range for many moons to come.

That’s one reason why I don’t find this pair terribly compelling.  The other is that it has little value as a mover of stock prices, so is harder to forecast from an algo standpoint.

UPDATE:  3:50 PM

This is getting a bit monotonous.  SPX and ES are back to nearly flat on the day after VIX pressed to within a whiff of our next downside target.  In fact, let’s consider it tagged. ES and SPX are both backtesting their SMA5 200s.  CL has poked back above its headline……and, USDJPY continues to ramp higher (whatever it takes) toward our next upside target. And, though I’m sure you’re all getting tired of hearing it…COMP looks just awful.

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BTW, I sent out a notice a couple of days ago regarding a deal I’m offering for current monthly, quarterly and semi-annual members.  New annual memberships (which will no longer be offered after the end of the year) are currently on sale for $800. 

Through tomorrow afternoon, though, current members can snag a auto-renewing Charter Annual Membership for only $750.  It’s a one year subscription for less than the price of 5 months.  And, your rate will be locked in for the life of the site.

There is a small catch: I’ll invoice you through Square instead of PayPal, which I am trying to wean the site off of.  To take advantage of this offer, simply contact me here or email me at michael (at) pebblewriter (dot) com with your preferred email address.

And, to those current annual PayPal members who don’t mind switching, I’ll knock $25 off the price of your subscription for switching by tomorrow to Square. We’ll just add another year to your current expiration date.

More later…