Friday, January 23, 2015

XEU Euro Weekly Chart 11-Year Low Price Extended

The weekly chart shows the complete collapse of the euro over the last few months and this week. As Keystone always says, the collapses out of rising wedges can be quite dramatic. This qualifies as a dramatic collapse from the red rising wedge. The indicators are oversold and the RSI, histogram and stochastics are positively diverged wanting to see a dead-cat bounce in this weekly time frame. The MACD line and ROC are weak and bleak so they want another lower low in the euro after any bounce occurs in this weekly time frame.

The red dots show price now extended to the downside under the 20 MA under the 50 MA under the 200 MA so a mean reversion will be needed (bounce). The pink box shows the ADX exploding higher above 51 verifying that the downward drop in the euro is a strong trend in the weekly time frame so this verifies lower lows ahead after any bounces. The ADX on the monthly chart does not show a strong trend in place on a longer term monthly basis as yet but clearly in this shorter several week basis the trend is strong and lower.

Those looking for the euro to plummet towards parity in quick order may be premature according to the indicators. The RSI and stochastics want to see a recovery bounce right now. The euro would be expected to stabilize after some choppy action occurs for a few weeks with a downward bias. At this time the euro is not expected to move below the 1.08-1.12 support zone. It may spend much of the year playing around in this range and parity may not come at all during 2015. However, a falling knife may keep falling--the next several days will be important. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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