$ES_F, $6E_F, $GC_F – S&P, EURUSD, GOLD – 18/03/2014

ES: 1864 MCPOC area – no daily close above 1869.75


ES weekly range chart, upper level 1920, lower level 1780


Euro trending up. Leveraged money is long this pair. Price coming to low volume area and 2011 balance – area last seen before Greece crisis. Euro strength seems to have been hurting the DAX (may also be German dependency on Russian gas, especially since they closed nuclear power stations after Fukushima). I recall German finance officials saying they are happy with Euro 1.33/1.35.

Draghi did mention the effect of the exchange rate on inflation (more below). Regardless of fundamentals the next area of resistance on a volume chart is the HVN 1.4227, support 1.3750.



Draghi said the euro exchange rate was “becoming increasingly relevant in our assessment of price stability” given the current levels of inflation and that the effective euro exchange rate certainly had a significant impact on the low inflation rate over the past year and a half.


The European Central Bank left rates on hold Thursday, leaving the key lending rate steady at 0.25%. ECB President Mario Draghi discussed the impact of exchange rates on euro-zone inflation at length during his press conference. In particular, he said the euro has gained about 9% against the dollar since its lowest point of 2012, which has depressed the current inflation rate by about 0.4%.

That was very specific commentary from Draghi, who continued to emphasize that the exchange rate was not a mandate for the central bank.

Gold reacts quite well to volume profile, regardless of scare stories or the idea that it is a store of wealth in Asia. Price did break out of a downward channel however his profile is top heavy suggesting a lot of people added to their long positions at the 1380/1420 level. Their buying power may be nullified by having averaged down at this level and they may be happy to sell their position at a modest gain. 1400 is a hugely important level for future direction.



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