Greek Concerns Overstated and Creating Buy Opportunities

15 February, 2012

Greek Concerns Overstated and Creating Buy Opportunities

As expected and forecast, we are seeing plenty of posturing by various political leaders in Europe as to how Greece has to try harder, and make firmer commitments. This is all playing to their own voters of course so as to be seen to be tough and not easily parting with their own nations funds. The core situation however is that the funding package for Greece is not at all in doubt. As suggested yesterday, the sell off in the Euro, particularly when due to credit downgrades was a great opportunity to buy, and the same can be said of today!

Europe will be the big surprise of 2012. We all know the recovery in the US is beyond a recovery now, and should be termed a new phase of strong growth, and as surprising as that is to many a pundit, that Europe will achieve 2% GDP growth this year will really annoy the bears.

The more positive than consensus fundamental reality of Europe, combined with a market that has been bizarrely obsessed with the notion of a Euro disintegration or collapse, means the upside for the Euro is an extremely exciting story.



FxMax Price Action

EURUSD    1.3115
The market keeps trying to sell off on any excuse, but it really isn’t working. As long as we stay above major support at 1.3020, this is still simply a correction period pulling back into the previous area of consolidation, base line 1.3020.

The trigger to signal that this corrective period had come to an end, and the major up-trend from the 1.2630 low was set to resume, would be a break of resistance currently at 1.3220, though a move above more immediate resistance at 1.3170, should prove a reliable early warning signal. Immediately, 1.3065 1.3135. A little more downside testing followed by some stability, and up-trend resumption is the favoured scenario.


AUDUSD    1.0675
Still looks like a great buying opportunity to me. Similar story to the above though the price action looks even more encouraging. Which market is going to move higher faster is a difficult call at this stage, both are looking good but if pushed would suggest the Australian dollar.

The recent consolidation phase is reasonably well defined, but frustratingly wide with significant internal volatility. Favour strong support at 1.0610 holding for several days consolidation that could be as narrow as 1.0650 1.0725, as things calm down a little, but the dominant risk remains very much to the upside. Immediately 1.0660 1.0705, and looking increasingly ready to confirm a major low is in place by moving above resistance at 1.0725 1.0780.

Clifford Bennett



 


  

Clifford Bennett

Clifford Bennett
Chief Economist
White Crane Group

Sydney, Australia.
+61 (0) 423 950 427
clifford@whitecranegroup.com.au
www.whitecranegroup.com.au