FXE Euro Daily Chart Negative Divergence

FXE euro daily chart showing negative divergence spanking price down. The rally ran from 129 to 138 which is a 9 move, then went into a sideways consolidation zone to set up a potential two-leg bull flag. Starting up for the second leg from 134 would yield 143 as a target but price only reached 142. That may be close enough for government work but a small gap was left behind up above four days ago (tiny green line). Thus, after a sell off, price may come back up to fill that gap at 141.2 and sneak up a bit further to create an M top and satisfy the two-leg bull flag, all at the same time.

Make no mistake, however, the euro has had its fun, negative divergence on weekly charts as well so the path of least resistance is down. The recent buoyancy was a result of Trichet's hawkish rate hike talk. In the coming days he has to lay his cards on the table and this chart would conjecture that he backs away from a hike, therefore the euro falls, dollar index rises, US equites fall.

After a few days and the reaction of price at the 20 MA at 139.4 is known, as well as if the green lower trend line is tested or not, will provide the answer about going back up for a potential M Top. Overall chart will continue with sideways to sideways down bias over coming weeks. Watch to see if RSI and/or stochastics fall below the 50% levels indicating more selling ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.