Stock Incubator

[dalcindo]

Re: EUR:USD - Expect further EURO rally:


As we expected in last comment (See: "$USD - Target Reached ... Expect EURO Rally below), EURO has rallied after $USD reached the upper border of its bearish channel.

While the EUR:USD pair continues to rally, a technical target set NEAR 1.35415 remains a viable spot over the next days, IMHO. This target was defined as 50% Fib retracement level (from LOW = 1.32666 on 25 MAR against HIGH = 1.3838 on 17 MAR).

While fundamental development within the eurozone seems to appease investors. Indded, certain financial guarantees have been laid down not only for Greece, but also for Portugal and any other potentially failing economies within that Union, thus sending a market wide message meant to reassure shaky investors - So far, the message seems to have been perceived quite well.

I believe that fundamental development will carry little or no further impact on the current development, here assuming as a pure technician that all fundamental development has already been absorbed, digested and accounted for within the current rally, thus sending the balance back towards the "pre-crisis" level, IMHO:


Technically speaking, in the first chart below, the USD continues to get stumped at the midline of the down-trend channel in the MONTHLY chart below. A pass over that line would speak favorably for the bulls out there, but until then, the mood remains guarded at best, if not subdued.

In the second chart, consider the predominant "oversold" features within the CCI, Wm%R, Slow STO, PPO lines,altogether forming our "Pre-Decline Pattern", which so often herald a bearish downturn.

A proxy view of the pair further illustrates the BEARISH bias that has developed in the relative strength chart expressed as UUP:UDN in the third chart below.


OVERALL - Overall, the charts continue to favor a rally in the EURO, and this may be expected to last until pair reaches the neighborhood of the upper channel indicated in the last chart below, IMHO:


$USD - MONTHLY Chart:




$USD - 12-Monthly, DAILY Chart:
[/chart]



$USD ETF (UUP vs. UDN: RS) - PS Index Bullish/Bearish Fund - 12-Mo., Daily Chart




$XEU:$USD (Relative Strength) - 12-Mo., Daily Chart:



- Dalcindo

-------------------------------------------------------------

Message in reply to:
Re: $USD - Target Reached ... Expect EURO Rally:

As mentioned in prior entry (See: msg# 1919 - "USD - At High, Yes ... But Should Get To Higher Last High"), we anticipated that despite technical overbought signals, the rally in $USD would first likely consolidate at the upper border of Trend 2, then continue to reach the next higher level up to the upper border of Trend 1.

That expected level was reached today, and the technicals are now pointing to internal weakening, suggesting that the point of EURO rally may have been reached.

So, look for strengthening of the EURO as of next trading week, as the US Dollar is likely to loose ground from recent yearly lows, IMHO:




----------------------------------------------------------------

- Dalcindo