The Fed’s future path still seems more bullish than the European Central Bank. If so, the yiel...
How to Trade Bounces on the Euro
11/08/2012 3:16 pm EST
Learn how Marc Principato is making money on the euro, and also a few tips on how to use the S&P as an indicator for currency trading.
The euro has obviously been a currency that is on everybody’s mind. It has been in the news lately. We’re talking about that today with Marc Principato. Marc, you are a currency trader. What’s your view of the euro right now?”
Well, it’s been crazy, as we all know. It’s all over the place. It recently made new lows at $22.90 about a week ago and since then, it’s bounced to $26. This morning I was looking at this thing pushing just $26.20, so we’re in a bounce mode right now. This thing is working its way up. It was oversold, so we’re just seeing a bounce. I think overall it is still generally bearish, but as a short-term trader, I am looking to do whatever the market tells me to do and right now, it is pushing its way up. Until I get some solid resistance, I’m going along.
I want to talk to you also a little bit about S&P futures. I know that is also an area that you trade. What’s your thought on that right now?
Well, here’s the thing. The S&P is actually a really good indicator or filter to help me with my euro trading. I am actually not as active in the S&P, but I use it to help guide my euro decision-making intraday; so basically what will happen is S&P will make new high; euro will typically make new high, euro against dollar. If S&P does not make a new high, for example, and euro starts to struggle, I also know that there is now weakness in the euro; so again, it acts as a great filter to help me decide if I should hold this thing – my euro position – or should I get out now, or what should I do? It helps me.
So are you actually trading S&P futures or just kind of using them as a gauge?
No, I am using them as gauge. They are just simply a filter; so I have my S&P charts up right next to my euro, and it’s like I said. If S&P is pushing highs, I don’t want to sell my euro. If S&P is pushing lows, I don’t want to buy my euro; so again, it acts like a nice filter; a great guideline to go by.
Now I know that you are primarily a euro trader, but are there any other currency pairs or even with regard to the dollar; what should people be aware of right now?
Well, I mean, everything is pretty much tied with the dollar; all the majors, meaning dollar-yen, dollar-franc, pound-dollar, so there is a lot of volatility surrounding the dollar; so any of those majors. You know it’s pretty much where there is a lot of action; a lot of volume as well. As far as getting into like exotic pairs, I personally tend to stay away from them. The spreads are too high; they are just too expensive to trade, and they are just not my style. So, you know; if you’re a more conservative trader or if you’re a newer trader—in my opinion—you’re better off sticking to the majors.
Related Articles on FOREX
Trade idea: No guarantees here of course, but maybe it’s a small caution flag for dollar bulls...
As of August 2015, renminbi (RMB) in payments globally accounted for 2.8 percent of the total, the f...
Our favorite horse to ride here for a “correction” lower would be the euro. And we would...