XEU Euro Weekly Chart 9-Year Low 1.18 Handle

The last look at the weekly and daily euro charts showed a potential bounce possible on the daily chart for a quickie relief rally but this does not occur and price instead continues lower as was expected on the weekly chart. The ECB meeting is 1/22/15 where universal consensus is expecting President Draghi to act with full-blown QE at least announce the intent that it is imminent. Everybody and his bro are short the euro.

The euro is currently at 1.1909 and prints an intraday low at 1.1883 which is a new nine-year low going back to early 2006. The weekly chart is positively diverged except for the MACD line in the VST (red line) but this is only moving sideways and wanting to stabilize and recover as well. The chart says the euro will stabilize at these lower prices and move sideways to sideways higher which flies directly in the face of the expected ECB QE. Obviously, with the further drop in the euro this morning, global traders are all in the Draghi camp drinking wine and waiting for the guaranteed (they think) announcement of sovereign bond-buying and an orgy in European stocks with the euro bludgeoned lower.

Interesting times since the technicals are forecasting the opposite (higher euro) of what is expected moving forward (lower euro). If short the euro and having enjoyed the collapse to present it is prudent to take the dough and exit. With the huge amount of shorts, once a relief rally kicks in it may be quite dramatic and strong to the upside. The flat to lower MACD line hints that the euro will need to retest the current lows at 1.188-1.190 in January after any near-term dead-cat and perhaps short-covering bounce occurs.

Global commodities, bonds and currencies may surprise in 2015 in that the moves may not be strongly higher or lower and instead in a sideways sick malaise which will frustrate bulls and bears alike. The euro weekly chart suggests exiting any short euro positions despite the expectation that Draghi will provide full-blown QE. 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.