Euro vs. US Dollar May Benefit

Given the uncertainty and confusion surrounding the upcoming confirmation hearings of Ben Bernanke, the Euro versus the US Dollar (EUR/USD) may be a good short term long.

The EUR/USD pair has definitely lost its bullish stride. Side note, may be a reason why the market paused or potentially started the long awaited reversal / pull-back.

If you look at the all-time chart below, you will see that there is good support around the 1.38 level. That is the previous all-time high resistance level, which held until 2007. It is also the 50% Fibonacci retracement level from the lows of 2009 to the recent highs of December 2009.


For now, though, look at a 20 day two hour chart. You can clearly see a sideways pattern, with a clear violation of support around the 1.4268 level.


Trigger: A break of the most recent highs, around the 1.4165 level (look at the five day hourly chart below).

Target: Previous support, with a couple of pips below, at around the 1.4268 level

Stop: Break of the support area around the 1.4097 level.

Bear Teaser? Stock Market Week Ahead

What a crazy week we just had in the stock market. With Tuesday's higher close, and an almost certain Republican victory on hand that evening for the open Senate seat in Massachusetts by Scott Brown, the logical thinking would be that prices would keep going higher.

Even the pundits were screaming buys - Jim Cramer, Larry Kudlow and many others; although, it is not a stretch for them to be mad market bulls. The logic behind the thinking was that with his win, the health care bill would be dead and gridlock would be back in Congress.

Obviously, the market's reaction was quite the contrary. Prices slid the most in a very long time. It could be attributed to the new "Volcker Rule", the continued anti-bank populist rhetoric. It could be that stocks are not reflecting well to positive earnings. It may even be the possibility of tightening by China. Or, could it be the unraveling of the Euro, thanks to the uncertainty of Greece?

Whatever the cause, we as traders only care to see the what - what the market is telling us. Currently, it is telling us that we are at a cautionary point. Last week's sell-off was bearish, but in the context of the current run from last March, it may be just a necessary pull-back.

A lot of eyes will be on Apple's and Microsoft's earnings this week. For a complete list of earnings this week, click here. More importantly will be the much anticipated tablet/product launch from Apple on Wednesday.

Not expecting much from the FOMC vote on Wednesday, but the language will be one to watch.

Wednesday night, President Obama will give his State of the Union address to Congress and the public.

Finally, the biggest unknown, and potential market mover will the confirmation vote of Ben Bernanke, which is to come later in the week.

I would love to see this market go down a little tomorrow, possibly test the S&P 500 1085 level range, then bounce back up into resistance for possible short entries. I like the underbelly of the YTD range on the SPY, which is around the 113 level. But, with so many possible news making events scheduled for this week, I plan to be very nimble and tread lightly.