UK & Europe Archives - Page 64 of 89

February 23, 2012

Forex: Euro, Pound Sterling, Yen and Rand

The euro broke medium-term resistance at $1.32, indicating a rally to test the descending trendline at $1.38*. Momentum is rising but the primary trend remains downward.

Index

* Target calculation: 1.32 + ( 1.32 – 1.26 ) = 1.38

Pound Sterling broke its descending trendline, but respect of the zero line by 63-day Twiggs Momentum suggests continuation of the primary down-trend. A fall below $1.565 (the last two weeks low) would warn of another test of primary support at $1.530. Recovery above $1.590 is less likely, but would indicate a rally to test $1.620.

Index

The greenback broke through resistance at ¥80 and is now retracing to test its new support level. Respect would confirm a primary up-trend, signaled by the long-term bullish divergence on 63-day Twiggs Momentum (and its recovery above zero).

Index

* Target calculation: 80 + ( 80 – 75 ) = 85

The Aussie Dollar consolidated against the South African Rand in recent months after a long appreciation. 63-day Twiggs Momentum is declining and breakout below R8.00 would warn of a correction to the rising trendline, with a target of R7.50*. Upward breakout, however, would offer an initial target of R9.00.

Index

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

February 21, 2012

Europe Reaches a Greek Deal – WSJ.com

Greece ended months of uncertainty as it secured a new bailout and debt-restructuring agreement during a marathon negotiating session of euro-zone finance ministers, but the deal leaves unanswered questions about whether Greece will be able to meet the terms of the accord……

Officials said the meeting, which lasted nearly 13 hours, produced a plan that would reduce Greece’s debt to just over 120% of gross domestic product by 2020.

via Europe Reaches a Greek Deal – WSJ.com.

February 15, 2012

Default Therapy

Why not let an insolvent debtor default and invite capitalism to do its work?

That’s the process an Austro-Hungarian economist by the name of Joseph Schumpeter used to call “creative destruction”…and it has worked pretty well over the years, believe it or not…….

Consider the divergent fates of two countries that came face-to-face with a financial crisis in 1990. One of these countries is still merely muddling along…20 years later! The other country is flourishing.

That’s because one of these countries, Japan, responded to its crisis by coddling its crippled corporations and by throwing monumental sums of taxpayer dollars at failing financial institutions. The other country, Brazil, responded to its crisis with relatively savage measures. It defaulted on its debts, devalued its currency (more than once) and did not stand in the way of corporate failure. Brazil’s responses were far from perfect, but they were much less imperfect than were Japan’s……

Too bad for Japan. Its economy has muddled along for two decades, while its stock market has produced a loss of 2% per year across that entire 20-year timeframe. By contrast, the Brazilian economy and stock market have both boomed during the last two decades, despite some very serious bumps along the way.

via Default Therapy.

February 15, 2012

Greek death spiral accelerates – Telegraph Blogs

Ambrose Evans-Pritchard: This is what a death spiral looks like. It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.

Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.

When the music stopped – ie. when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.

via Greek death spiral accelerates – Telegraph Blogs.

February 15, 2012

How to Fix Europe’s Banks – WSJ.com

Francesco Guerrera: A simple solution is staring the likes of Deutsche Bank AG, BNP Paribas SA and Banco Santander in the face: large, decisive, increases in capital through equity sales that would allay investor concerns and boost balance sheets. With the year-end results almost all out of the way, banks should start raising capital soon. The experience of the U.S. financial crisis shows that in stressed times capital infusions can cure or mask many ills and buy valuable time to restructure businesses.

via How to Fix Europe’s Banks – WSJ.com.

February 13, 2012

UK and Europe

The FTSE 100 is retracing to test the new support level at 5750. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Reversal below 5600 would warn of a bull trap, while respect would confirm the primary up-trend.

FTSE 100 Index

* Target calculation: 5750 + ( 5750 – 5100 ) = 6400

Dow Jones Europe Index is consolidating below resistance at 260. Penetration of the descending trendline suggests that a bottom is forming. Breakout above 260 would signal a primary advance to 310*, while reversal below 240 and the rising trendline would warn of another test of primary support at 210.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

February 6, 2012

Europe: UK and Germany signal bull market

The FTSE 100 broke through resistance at 5750 to signal a primary up-trend. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Target for the initial advance is 6300*.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5100 ) = 6300

Germany’s DAX also signals a primary up-trend, with a target of 7400* for the initial advance.

DAX Index

* Target calculation: 6400 + ( 6400 – 5400 ) = 7400

Italy’s MIB index lags behind, but breakout above 17000 would give a similar signal, with a target of 20000*.

FTSE MIB Index

* Target calculation: 17000 + ( 17000 – 14000 ) = 20000

February 2, 2012

Forex: EUR, GBP, AUD, CAD, JPY, ZAR

The euro remains in a strong primary down-trend. The current rally is testing resistance at $1.32, but 63 -day Twiggs Momentum continues to trend downwards. Breach of support at $1.26 would signal a down-swing to $1.20*.

Index

* Target calculation: 1.26 – ( 1.32 – 1.26 ) = 1.20

Pound Sterling has breached its declining trendline against the greenback, warning that a bottom is forming. Breakout above $1.62 would complete a double bottom reversal, testing the 2011 high at $1.68.

Index

* Target calculation: 1.62 + ( 1.62 – 1.53 ) = 1.71

Canada’s Loonie also signals that a bottom is forming. Breakout above $1.01 would indicate the start of a primary up-trend, with an initial target of $1.06*.

Index

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

The Aussie is testing resistance at $1.08. Breakout would similarly signal a primary up-trend with an initial target of $1.18*.

Index

* Target calculation: 1.08 + ( 1.08 – 0.98 ) = 1.18

The greenback is testing primary support at 76 against the Japanese yen. Breakout would offer a target of 72*. Recovery above the declining trendline, however, would suggest that a bottom is forming — confirming the large bullish divergence on 63-day Twiggs Momentum — while breakout above 80 would signal a primary up-trend.

Index

* Target calculation: 76 – ( 80 – 76 ) = 72

The South African Rand is strengthening against the US Dollar, while encountering resistance at R8.50 against its Australian counterpart. Downward breakout from the ascending triangle would warn of a correction to test the long-term trendline at R7.50, while breakout above R8.50 would indicate another primary advance, with a target of R9.50*.

Index

* Target calculation: 8.50 + ( 8.50 – 7.50 ) = 9.50

February 2, 2012

The Euro Crisis Makes Absolutely No Sense – Brett Arends (WSJ)

WSJ: Mean Street

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Brett Arends exposes flaws in Eurozone efforts to resolve the currency crisis.

January 30, 2012

UK & Europe

Dow Jones UK index retreated below support/resistance (the lighter shaded candle reflects an incomplete week) at the October 2011 high, suggesting a bull trap. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure.

DJ UK Index

The FTSE 100 shows a similar bearish divergence on 13-week Twiggs Money Flow. Reversal of 63-day Twiggs Momentum below the zero line would strengthen the bull trap signal.

FTSE 100 Index

Dow Jones Europe index is testing medium-term support at 240. Breach of the green ascending trendline would warn of another test of primary support at 210 — as would 63-day Twiggs Momentum respecting the zero line.

DJ Europe Index