EURUSD Short term Triangle - Technical Analysis - November 2, 2011 12:52 AM EST

I would not be surprised to see this triangle breakdown and make a run for short term lows.  No news is bullish for the EURO, the deal that was reached last week to save the Eurozone has been tossed out the window with the Greek Referendum called.  No one can expect a country that is being squeezed by an economic slowdown along withe riots and crippling strikes, will vote for more pain in the short run.

Reality sets in (at least in the short run) - S&P500 down over 2.2%, Eurusd collaspes

Anyone that participated in that ridiculous rally on the news that the Eurozone is "saved" have just got served.  The price action has moved sharply lower.  This Candle stick pattern some what fits the classic Evening Star

  

The EURUSD has led that collapse as Greece have been discussing a potential referendum on the current plan.  Judging by the number of violent riots and strikes I highly doubt the referendum will pass with flying colours.

EURUSD Plunges on news that MF Global is nearing bankruptcy

5 min chart, as you can see Eur/Usd just woke up to negative this Sunday.  The pair has continued to drop since this screen shot.

For an updated chart check out: freestockcharts.com

From Zerohedge / Bloomberg

• CLEARINGHOUSES SAID TO PREPARE FOR MF BANKRUPTCY, WSJ SAYS
• US REGULATORS ALSO PREPARE FOR MF BANKRUPTCY, RESTRUCTURE: WSJ

EuroSummit Over EURUSD Chart almost at 61.8% of August peak

Tough resistance above for the EURUSD.

The EuroZone Plan of 1 Trillion Euro EFSF seems smaller than the market has priced in.
The 50% hair cut of Greek debt was a given.

EUR/USD review - Options Expiration Week watch for Volatility

Watch for breaks of the above indicated levels of support.  EuroZone has 1 week to deliver a collective solution to tame fears of a global recession.

From Bloomberg: G-20 Tells Europe to Deal Decisively with Debt Crisis at Oct-23 Summit

European officials “will have left Paris under no misunderstanding that there is a huge amount of pressure on them to deliver a solution,” U.K. Chancellor of the Exchequer George Osborne told reporters. Next weekend “is the moment people are expecting something quite impressive.”

Options Expiration Week

Keep a close watch on the VIX

Economic Events Calendar from Bloomberg 

S&P Downgrades Spain from AA to AA-. EUR/USD Topping?

With Spain just downgraded from AA to AA-, is it time for this run up in EUR/USD to give way in the short term at least.

Wall Street Journal provides an overview of this event:

-- S&P drops Spain to AA-, three notches below top AAA rating, with a negative outlook
-- Cites banking sector risks, says labor market reforms needed
-- Move follows Fitch's downgrade of Spain last week; Moody's could be next

Geo Poltical Risk - International economic slowdown - Markets poised to open sharply lower

It is September 6th, 2011, around 1 am and it is easy to tell this week will be extremely volatile and risk aversion might be in full swing.  The above table  from Bloomberg shows the futures of the three major US indexes.  DJIA is down 2.48%, S&P 500 is down 2.75%, and NASDAQ 100 is down 2.36%.

Why is this happened?  Well one of the reasons can be simply found by looking at the EUR/USD.

The Euro broke, stemming from a critical German vote on the legality of bailing out Eurozone members such as Greece, Portugal, Spain, etc.

An excellent summary can be found in this recent article from the Telegraph:

• German stock markets plunge 5pc ahead of crucial vote on crisis
• "The German stock market plunged to its lowest level for two years - shedding 5pc of its total value in one day - amid fears of the apparent impotence of European leaders in the face of the debt crisis."

 Not to mention that Greek 2 year bonds are Yeilding over 50% -  From Bloomberg: GGGB2YR:IND


Middle east is also heating up, Turkey will be challenging the Gaza blockade in the UN while in the same week working with NATO to build a missile defense system for Europe. 

Along with the Eygpt/Israel row and Syria's continuing uprising.

The fundamental and technical picture looks horrible for the markets and it is expected that without further stimulus the market will pull back substantially over 6 months.  However, more easing will contribute significantly to a seemingly parabolic move gold and silver.  Gold is close or at its all time high as I conclude this blog post:

Wow looks like it did or almost touched 1920... that is an all time high folks.

Nov 28th, 2010: Eursula, and STL indictmento Debt burden, Wikileaks, Korea Penin

4 major geopolitical and macro-economical news items to be aware of

1 - Euro Debt Burden

ZeroHedge: Eurozone Cheat Sheet

There is a million things to say about the above statistics but I will limited my comments to the graph on the bottom right.  It shows the maturity due dates as a % of total debt for each country in the Euro Zone.
Coupled with the overall Debt to GDP ratios a stalk future awaits us.  Yes we will be able to push off this Ireland situation off for a few more years, but what happens in 3-5 years? Portugal, Italy, and even Belgium doesn't look in very good shape.  I think a lot of people are short sighted on global debt situation.

2 - WikiLeaks ~2.8 million leaked documents

WikiLeaks threat sparks massive review of diplomatic documents

Wikileaks: US warns allies on potential diplomatic leak

"Reports say Turkey, Israel, Denmark and Norway have also been warned to expect potential embarrassment from the leaks."
"State department spokesman PJ Crowley warned on Wednesday that the release could weaken trust in the US as a diplomatic partner."

It is rumored that the leak will be coming 4:30 pm Sunday 11/28/2010, but having seen mainstream acceptance of that time frame.

3 - Korea situation heating up, US and South Korea continue with joint exercises

Artillery Heard in North Korea; U.S. Carrier Enters Yellow Sea

"The echo of shots rang out this morning, said a South Korean Defense Ministry official who declined to be named, citing military policy. While residents were later allowed out of shelters, the aircraft carrier USS George Washington joined South Korean vessels for four days of drills.

U.S. Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, said the U.S. is trying to prevent the tensions over North Korea’s Nov. 23 attack on the South Korean island on the disputed maritime border from escalating into a more significant confrontation."

US, South Korea Begin Military Exercises

"Earlier Saturday, China launched a flurry of diplomatic activity to ease tensions on the Korean peninsula after North Korea's shelling of the island.
China has warned it opposes any "unilateral military act" in the area without its permission, referring to the U.S.-South Korean drills.
Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, told CNN (in an interview due to air Sunday) that, as North Korea's closest ally, China has as much at stake as anyone if the region is destabilized."

4 - CBC leak and upcoming indictment

This situation will cause an escalation in the region.  It will be interesting to see how the UN approaches this announcement which apparently will come Thursday Dec 2, 2010.

CBC Investigation: Who killed Lebanon's Rafik Hariri?
Phone Chart

 
STL: Saudi envoy expects a major breakthrough soon

"Ad-Diyar reported that the Lebanese Foreign Affairs Ministry received a notification from Lebanon’s Embassy in the Netherlands that the Special Tribunal for Lebanon (STL) will issue its indictment on December 2. Lebanese Ambassador to Netherlands Zaidan as-Saghir has reportedly also confirmed that the indictment will be issued on December 2"