euro vs. dollar

Euro vs Dollar Chart 16 Aug 2010

A seminal week for the euro vs dollar which closed on the weekly chart with a wide spread down candle and giving us a clear bearish engulfing signal as a result and almost certainly signalling the end of the recent short squeeze higher.  The extent of the rally caught many analysts by surprise but as we have been forecasting over the last few weeks the rally has been looking increasingly weak particularly as the euro vs dollar pushed towards the deep price congestion between USD1.33 and USD1.3750 coupled with the additional pressure from both the 40 day and 200 day moving averages above.  Whilst last week’s steep fall was largely triggered by the FOMC statement the extent of the fall came as no great surprise and provided this signal is validated then expect to see the euro vs dollar continue to move lower over the next few weeks.  In early trading today the pair has managed to recover slightly and currently trade at USD1.2816 having found a small platform of support from the 40 day moving average which also prevented a steeper fall on Friday.  However, once this has been breached, and coupled with the bear cross signal of the 9 day moving average below the 14 day moving average, expect to see the pair trade lower as a result, initially testing USD1.2712 followed by USD1.2480 and thereafter USD1.2354 in due course.

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