Tuesday, August 28, 2012

FXE Euro Daily Chart Inverted H&S

A month ago Keystone highlighted the falling green wedge and positive divergence that signaled launch time, and price leaped higher as would be expected in late July.  During August, higher price highs are printed, and the RSI and MACD line are long and strong, but, the histogram, stochastics and money flow are not as enthusiastic about the price move higher. This caused the mini spank down over the last couple days but today the euro is moving up again.  Once price hits the first green dot where it makes a higher high, check to see if the red lines showing negative divergence remain in place, or if any of the indicators want to see yet another higher high in price, perhaps the second green dot which is the gap fill from early July, or the third dot which tests the neckline of the inverted H&S and threatens a break thru which would catapult the euro higher.

The inverted H&S has a head at 120-ish, neckline at 126-ish, it will need a right shoulder as time moves along, but a move up thru 126 would target 132-ish, important resistance above. Once all the central banker stuff occurs in September, perhaps some clarity will be provided. The euro moves in the same direction as the SPX currently, so up euro means up markets but it is unknown exactly how the euro will react once all this casino stimulus stuff is mixed in. Time will tell.  Perhaps the QE3 money pump, should it occur, will correlate to a weaker dollar, stronger dollar and stronger equity markets allowing the FXE to target the 132 level.

The 20 MA is about to pierce up thru the 50 MA which is a bullish indication.  Projection is a pull back for the euro from any of the three green dots with price moving lower to place a  right shoulder for the inverted H&S pattern in the 120-124 area, then price will come back up to test the neckline of the pattern at 126-ish after that. For now, follow the same trend, up euro = up markets, down euro = down markets. 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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3 comments:

  1. MCAPAugust 28, 2012 at 9:28 AM

    Was doing some reading a rare thing as I'm always looking at charts and I have wanted to go short EUR but despite overwhelming evidence support the thesis fundamentally as with anything manipulated you must acquiesce the power structure as per the central banksta's mantra. As much as I'd like to be trading solely TA its really become and HFT market. I'm doing trades now that are on 45 second time frame it's gotten to that point where the prices just keep running through entry so many time you don't know what to do. So you size up and HFT with algo which is whole other nightmare at time but what else can you do. I'm anxious to see this week out and see what 3rd and 4th quarter bring.

    I'm looking to make and investment (not a trade in JO) today if I can get it down about a .25 from where it is I'm going to start to scale in and write call a few dollars higher I'm looking for about $7.00 move out of that this year.

    Hey KS on the UVXY her is signal as soon a you buy shares of that and it up a nickel sell it... That's all you can do with that damn things its a slippery slope but what I really like getting in trouble with is SOXL and SOXS.

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  2. MCAPAugust 28, 2012 at 9:31 AM

    Oh case in point to what I was just saying crude oil in the time it took me type the above moved .20 cents lower. I was just long that contract in size for a scalp now if I didn't exit that trade which I did I would be down about a trip to Europe all expenses included. Not a user friendly market I will say that.

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  3. Keystone SpeculatorAugust 28, 2012 at 9:55 AM

    Interesting stuff MCAP. Yep, you have to be nimble these days. The headache lately is the flatish nature of markets, they ran up on the QE hype and now idle ahead of all the action beginning on Friday, so it is a difficult trading environment. In these markets, take the money when it is there, just like you mention.

    Coffee, JO, another cute ETF monker as in a cup of joe, looks sideways-ish though, the weekly chart hints that it actually may want to see a test of 36 again, and there is also a gap at 37.42. The 20-day and 20-week MA's are overhead resistance.

    Semi's will have their day. If copper rolls over, semi's will probably roll over next causing major market problems. Bears have a slight edge with SOX now, maybe the 200-day MA at 393.28, should it rupture, will signal the downside. SOX 389 will be big market trouble.

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