The European Union, Euro, And Greece As Related To Automatic Forex Trading

Automatic forex trading has been extremely volatile as of late as a result of the sovereign debt crises currently unfolding in Greece . Many fear that this crisis in Greece is going to spread to other EU countries that are deep in debt such as Spain, Portugal and Italy . As a result of these problems, against the US Dollar the Euro currency has dropped about 11% . There are a few questions we need to ask as we look at this situation : Is the end of the Euro sell off here and is the recent strength in the US Dollar a result of strong fundamentals in the United States or of weakness in the Euro ? The questions are very important because the answer to the first question will be impacted by the answer to the second one .

I would argue that the US Dollar is simply benefiting right now due to the Euro weakness and only that weakness. The US consumer spending driven economy has only picked up steam because the Federal Reserve for some time has left the rates near 0%. What will happen when the Fed is forced to raise rates ? Will the economy in the US be able to deal with this ? The answer is likely no . Also, it is important to keep in mind that consumers are spending more right now because they are walking away from their mortgage payments, credit card payments, and auto payments just to name a few . This means that consumers have income that they usually don't have so they are spending more in other areas like dinner out, new clothing, and the newest technology items. Again consumers are going at it like crazy. It wasn't sustainable in the last Federal Reserve inflated boom and it will not be sustainable this time . The only options for the US Dollar in the next few years are default or inflation and those two things can only mean disaster for the Greenback .

When involved in automatic forex trading the goal is to make some money. We are not biased toward anything . We want a profit from the foresight we have. So the answer to the second question is that there will be a point when the Euro bottoms out because it has been over sold. Probably around 1.2300-2400 . After all , do you think that the world's 3rd largest economy, Germany , will allow the failure of their currency ? Probably not. More than likely they won't. And that is precisely why they are not jumping at the opportunity to print more Euros and bailout Greece . Due to the problems in Greece the Euro will become a currency that is more sound . The investors world wide will realize that the Euro is a safe option because when they face problems they will deal with a loss in the short term to preserve their health in the long term . Thus , their economy may be having a tough time , but their unit of money will end up being better. The situation in the United States is just the opposite. Money is being printed to avoid short term problems , but this only causes a problem with the long term health of our money and economy .
With all of that said , we soon will be to a point where you will get a great bargain from the Euro that you can take advantage of in your automatic forex trading. Not just for all of the reasons outlined above , but you also need only look at market psychology . The professionals buy when there is a free fall and then the average person finds out about a crisis, comes in, and then tries to short the move that is already over. Already this pattern has happened over and over again, and will continue to repeat itself as long as the limbic system plays a part in human physiology .

David F Dacosta - Is a private trader using technical analysis to do automatic forex trading & futures trading. David makes specific trade recommendations for a small select group of traders. He uses drummond geometry to make his forecasts. Click Here for training materials and a free forex trading forecast.


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