Trying to deal with tomorrow`s emotional trainwreck

An article by Gus    No Comments

With tomorrow unofficially being declared as “who gives a shit other than everyone on the planet” day in the Eurozone, one thing we can expect is a lot of money floating in and out of the market. Some of you know that I can be a fan when it comes to trading volatility: it’s the impatience, speed and forecasting the trainwreck of human emotions that always get me.

The ultimate question tomorrow will be: Can European leaders devise a plan that will adequately restore the market’s confidence?

In other words, will we see a replay of the same old bag of tricks or can we expect a new European pyramid to take over Santorini?

Scenario 1: The move doesn’t immediately make “sense” following a positive result…and by sense we mean the textbook definition

If an ultimately positive result for the Eurozone is immediately thrashed by sellers, the first reaction is to look for a place to line up on longs. Looking for levels of heavy touted order flow below the current trading price at the time in order to assess potential areas of entry for a longer term movement.

Scenario 2: It’s just ugly

Don’t look for much upside even on a “false” move. One hard push and its gametime. Selling is selling.

Scenario 3: Positive, unique result with far-reaching and beneficial outcome

Longs have been piled on over the past few weeks, and recent order flows have indicated stops above current levels without too much in the way of pressure from offers above. The road is generally pretty open to the upside, with targets back into the base of the last major consolidated range. The 1.4000 handle has been the only one contested, though I’m quick to be skeptical on that point. The 1.3940-1.3960 spike base has, as usual, been a formidable contender of resistance.

Scenario 4: Everyone is confused over what these leaders have actually devised

Whipsaw, into and out of heavy order flows, but I suspect a general direction is going to be declared at some point.

How long is this move going to last? That depends on the severity of the outcome. This meeting truly is the largest “coordinated effort” (and by that, we mean first time they have all gotten together, in strong fashion, to actually come up with a full plan covering the largest scope of this crisis), so the hype is present. It is also the one that has been presenting a much higher degree of speculation in terms of what is going to actually happen.

Scenario 5: Soft language or more stalling and everything is a wash

Pack up your stuff and do something productive

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It should be a very interesting day no matter what happens, I am hoping they do give us some information and not the usual we are still planning on having a plan at one point, which is the crap they have been giving us for quite some time now.

Hope you all enjoy your night and I will see you all on Google+ and Twitter in the morning.

Gus FX