XEU Euro Daily Chart Sideways Channel Negative Divergence Bollinger Bands

The euro is enjoying another move higher over the last few days.  The black sideways channel thru 127-131 continues and the euro is threatening the upper rail at 131 this morning.  Over the last two weeks there is now a matching and higher high with the euro and the indicators show negative divergence across the board (red lines). Therefore, the euro should set up for a spank down starting today or early next week.  The euro touched the upper BB as December started and moved down to the middle BB, as would be expected. Instead of continuing lower, however, towards the lower BB, the euro bounced off the middle BB and now is moving towards another touch of the upper BB.

The gold circle shows the golden cross that occurred six weeks ago, so price is elevated after that signal.  The November low is interesting since the euro did not bounce due to positive divergence. Instead the lower rail of the sideways channel held, and the touch of the lower BB sent the euro higher. The weakness in the indicators hint that the euro will need to come back down to test 127 in the days and weeks ahead. The ADX is very low showing that the bounce in the euro is not a strong trend.

Projection is for the euro to top today or early next week at 1.3090-1.3160. The touch of the upper BB, the resistance of the top rail of the channel, and the negative divergence that should remain in place (check the divergences if the euro moves higher into the red circle), should create the spank down.  Shorting the euro is a possibility moving forward; an EUO long trade has potential. Euro down = dollar up = equities down. The euro must be weakened in early 2013 to help increase Europe's growth. 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.

Note Added 11/14/12 at 12:30 PM:  The euro is 1.3163, a high at 1.3173 today. This achieves the target area listed above and prints the euro in the red circle. The negative divergence remains in place. The next couple days will be very interesting for the euro. A stutter step sideways may occur for a day or so but the projection would be a roll over. The upper BB is 1.3182 so the euro is within a hair. This 1.3173 level is a test of the September high and very important.