Currency analysis: euro on a full-moon day.

  

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Remember the Moon

Remember the moon my friend
Our line of sight
Joining our separate nights

Remember the moon my friend
When days seem dark
Yet sun burns the sky blue

Remember the moon my friend
When rains come, mangoes ripen
And even cattle refuse the bounty

When frogs croak
And pigs wallow
And birds nest again

The sight of the moon 
Is as eyes meeting
Faster than light
Our gaze drawing us near

The sight of the full moon
Pulls us as it pulls oceans
A silver thread
Strong as spider's web

The sight of the moon
Sometimes a sliver
And sometimes full as day
And sometimes appearing at the sun's setting

Our eyes will find it
When loneliness fills them to brim
With the salt memory 
Of cashews roasting in a tin
And of the the river swim

-Shirley Whalley

I was driving home on the highway last night. The sky was clear. And I had plenty of time to enjoy the full moon (which officially occurred early this morning.)  

Thanks to my loony father, the first thing I thought of upon seeing the moon: is this going to impact the markets tomorrow? 

From www.FullMoon.info:   

The moon teaches patience. Just like everyone knows that a low is followed by a high and vice versa. How long each of this condition lasts however, cannot be predicted in most cases. So it might be helpful for many people to create a time frame for themselves. For example, by believing in the phases of the moon. 

You’ve probably heard the full moon blamed for all kinds of things crazy. Increased crime and deviant behavior are common examples; here is another from Wikipedia: 

It was suggested that the full moon might have influenced voter behavior in the US 2000 presidential election. 

Sounds like another reason for Al Gore to blame global warming in the name of personal gain. 

Regardless of the proposed reasons for why a full moon might influence human behavior, the physical or physiological science to back it up just doesn’t appear solid or plentiful. But psychology may be closer to explaining the behavior. 

As we believe, and many would concur: markets are driven very much by human nature. In other words, prices fluctuate based on the mostly irrational beliefs of its participants at any given time. If the majority expects an event or circumstance to occur and places bets in synchronization (or close to it), it will move markets—you know that. 

Thus, if enough people are cognizant of full moon days and the potential for them to incite unexplained deviant behavior, then that expectation may fulfill the prophecy and cause such behavior to occur. 

So, the expectation of that potential may cause investors/traders to react in synch on full moon-related price action. Catch my drift? 

Looking at the euro today, it has made another daily low in its lasting downtrend. But price has bounced from the low. If price finishes higher and above Friday’s close, we would be looking at a key-day reversal in the euro that might open the door to a sustained move higher:  

Three items to note on the above chart: 

A)     The euro is firmly in the middle of a downward trend channel still, suggesting further downside possible.

B)     The euro has broken through key chart support levels (red hashed lines) which may garner additional selling pressure.

C)     The euro is testing the lower 2^nd standard deviation of its 50-day moving average for the third time, suggesting any bounce here could last a couple weeks rather than just a couple days if the recent past is any guide. 

Good luck out there today. Try to keep your inner weir wolf contained, unless of course no one else does. 

[Note: For the record, my loony father disagrees with my assertion that the moon cycle is about self-fulfilling prophecy.   He believes it is physiological in nature and if anyone ever doubts that, just talk with a seasoned police officer.  According to Jack, there is much more that operates in the world than the cause-effect stuff we do know about. Just because we cannot explain it, doesn’t deny its existence. And when it comes to actively traded fear-and-greed markets that are based on nothing but flawed future expectations anyway, even subtle impacts on that delicate human nature can have an impact on market prices.]