Merkel/Barrosso Press Conference

Here are the highlights...

• MERKEL SAYS WE NEED MORE EUROPE, NOT LESS IN EURO-ZONE (sounds familiar)
• MERKEL SAYS WILL DISCUSS EUROPEAN SUPERVISIONS OF BANKS AT EU SUMMIT, BANKING SUPERVISION IS A MID-TERM GOAL
• BARROSO SAYS WILL PUSH FOR BANKING UNION AT THE COMING SUMMIT
• MERKEL SAYS EU NEEDS ANSWERS SOON ON POLITICAL UNION
• MERKEL SAYS DISCUSSING EU BANKING SUPERVISION WITH BARROSO
• BARROSO SAYS EU SHOULD DISCUSS ELEMENTS OF 'BANKING UNION' -> we agree to hold another conference at a future time

Meanwhile, even though we had strong signals around the May 15th area, I had NO IDEA how the Euro/USD might reverse, I'm still not sure what is causing the initial stages of a reversal beyond the evidence we have that Wall St. or Institutional money in general has been active in underlying trade which can't be seen via price alone (until this last Friday). I suspect that whatever the "Catalyst" is, it will have little to do with the real reason which is smart money's manipulation of the market which they can do on a sub-intermediate and even intermediate trend, for example the October rally off the lows had been accumulated since August of 2011, that along with dishonest or misleading at best, economic data was pretty much enough to keep the market moving higher since the October low-just to give you some idea of what they can influence, although their operation are usually much smaller (days-weeks), but they can effect longer trends than one would think.

The Euro'd record short interest has to have the Euro shorts a little panicky right about now, not because of anything in Europe actually getting fixed beyond press conferences, statement s and some policy action that always seems to fall short, way short; but rather they know that record short interest is a juicy set up that Wall Street most likely won't ignore as there's a lot of money to be made shaking them out of the trade.

As for the currency pair...

 The Euro didn't seem to react to the press conference, but it is still acting well.


 Friday the Euro was up, the dollar down, I suspected the NFP, but now I suspect the NFP may just have been cover. The green arrow is the FX market open last night and the Euro has moved higher since.

 Here are some local levels of resistance, probably why the Euro is a bit flat right now as it would need to fuel up before challenging them.

 Here's the daily chart, look how close we are to the start of a strong Euro short squeeze with lots of upside momentum the last few days.

 Euro 1 min leading very positive today, the negative divergence at May 21 saw a head fake move at the yellow arrow just above resistance, remember that head fake moves almost always precede a reversal. Note the change in character in 3C last week.

 The 3 min chart with the head fake move in yellow, a clear change in 3C character and price has begun to respond.

 The 30 min, with a leading positive divergence in th Euro.

 The USD 2 min-note the deep leading negative divergence just before May 15th as discussed in last night's post, then a small accumulation patch that ran out of steam quickly as distribution set in to a wicked leading negative divergence. This is what I mean about having a longer term divergence in place and then coming back to the short term charts for better timing.

USD 50 min leading negative around the 15th of May , accumulation before that near lows and the $USD has not been able to recover, still leading negative.

A Euro short squeeze and $USD sell-off look like they are right around the corner.