Today is supposedly 'the day' where all the solutions and or proposed solutions to the Eurozone debt crisis will be revealed. Not to sound too irritated, but this never ending discussion/debate between leaders and bankers is wearing thin. As far as I can tell unless the printing press is brought out (i.e. flown over by The Bernank in his helicopter) it seems that all the solutions currently on the table will simply not be sufficient to alleviate the crisis. Goldman Sachs notes in their AM research piece today that "bank recapitalization, a more aggressive haircut on Greek debt, some form of insurance guarantee on new issuance using the EFSF as well as promises of further institutional reforms." are the likely outcomes - maybe that will be enough to satisfy the market, we must wait and see what unfolds.

As traders, we walk a fine line each day between anticipating a move and simply guessing the direction of that move. Given that the current market in EUR/USD (or any EUR cross for that matter) is primarily driven by each and every headline, it is tough for us to gauge and therefore make solid forecasts in EUR/USD. So until a clear picture develops we must simply stand aside and focus on other areas of the FX market.

Luckily, there is some clarity in the likes of the S&P 500 and AUD/USD. Granted, these markets are fickle too and driven to some degree by what happens in Europe, but over the last few days we have been able to forecast and navigate some price action and capitalize, albeit in small doses. Let's first take a look at AUD/USD, if one were to merely look at the chart as of this AM, it looks pretty solid - with clearly defined stops (<1.0275) and an upside target of 1.0600. The pull-back overnight into the 1.0325 level seems to have been fed by some weaker than expected CPI data. "The underlying pace of Q3 CPI reported Wednesday, 0.25%-0.50%, is lower than forecast and will, at worst, have the RBA assessing the current pace of underlying inflation at 2.5%, and arguably a touch lower (in the 2.25-2.5% range) - sharply below the RBA's end-2011 forecast of 3.25%. This adds to the RBA's recent re-assessment that near-term growth is unlikely to be as strong, that inflation was already picking up less than expected, and that the global outlook had worsened." * * Source: UBS

This begs the question, 'ignore the data and trade the chart?'

AUD/USD 30-min chart

Click on image to enlarge!

Depending on ones approach, they may simply focus on the chart and that is certainly a reasonable approach. However, we feel a more comprehensive diagnosis will often yield better results. We approach each trade through the prism of 3 categories:

• Inter-Market Analysis
• Pattern Recognition
• Account, Risk & Trade

We call it the IPA Method. Thus, using that as our approach, we can quickly evaluate the attractiveness of AUD/USD from a long perspective:

• Inter-Market Analysis - if we are going to trade AUD/USD we need to know what the S&P's are doing, i.e. do they confirm the bullish chart pattern on AUD/USD? At present, yes and no. The chart of the S&P's overall is bullish, but it appears that prices, purely from a technical standpoint, are set to move a bit lower first towards1222/08

Click on image to enlarge!

• Pattern Recognition - the technicals for AUD/USD are in place

• Account, Risk & Trade - this category can have a degree of subjectivity to it as each traders view may be a bit different. However, as of this AM we have 2 pretty big macro events on the table: 1. Eurozone meeting and possible solutions to the debt crisis and 2. U.S. Durable Goods orders. Now, we are not ones to be too persuaded by upcoming economic data, waiting to place a trade once you see what the data is is reactionary trading. However, given that this Eurozone crisis continues to drag on and is clearly a major factor in day to day price action, it has to be considered.

Here is how we tally up based on the above parameters: hold off on AUD/USD longs. With the S&P's not currently confirming the chart in AUD/USD as well as the overall uncertainty surrounding Europe, even trades that are initiated with little capital exposure to the client really do not have a meaningful edge presently. Stay tuned however, conditions can and are likely to change quickly, so what may be an incomplete picture presently could easily evolve into a well defined trading set-up in a few hours.

For more from Dave, visit Aspen Trading for more updates.