Posts Tagged ‘Euro Dollar’
The Euro Is Bottoming Out Against the Japanese Yen
If one gives a brief glance at the Charts of major currencies as they are currently being traded against the Euro, there can be observed a certain change, maybe even a trend-reversal in the making. This is especially true when you see the EUR/JPY cross rates in the Chart below:
The June Double Bottom can be clearly seen as a W shaped bottom built in a classically-shaped pattern. What makes the bottom even more commanding is the long and extremely proving negative divergence that I show in blue from the beginning of May to the start of June. The RSI trend, as shown by the blue line below, is in an upwards trend, while the prices are in a definite downwards trend, as shown by the blue line above. This lends credence to my thesis of a W bottom having formed on this Chart.
All of this is good news for the Euro, which had little good news to smile at lately. And, considering the 6-8 possible bottoming patterns I have seen in Charts depicting trading of the major currencies vs. the Euro, this may be indeed the time to invest in what I see is a relatively cheap Euro that in my mind has been bashed enough and is now in turn for better days.
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Buying Opportunities for the Eurodollar
Upon observing the European Currency of choice, the Eurodollar, it seems fitting to say that a trend reversal is on its way. The direction has been a long downwards pattern and is now showing signs of shifting to an upwards pattern.
The symmetric triangle it has been in against the Dollar has broken downwards as seen by the monthly chart below. The May candle shows the strong break and other signs such as momentum indicators show the beginning of the end of this monthly triangular resting pattern and the start of a daily downwards trend.
But, the weekly chart at the bottom does indeed show a single candle pattern known as a doji hammer. It indeed looks like a hammer but a straight line instead of an anvil, similar to the small English ‘t’. It comes usually signaling the ending time for a trend, this time a short to medium-term trend. If you add to this the support line that is a strong and historic line and you have the makings of a good, solid buying opportunity.
The US Dollar has broken downwards strongly this month. This is especially true because of the problems that the European Union has had with weak European Countries, especially Greece. Hungary has had its share of problems, but even as a EU Member, it still lacks the Eurodollar and that has been to its own and Europe’s benefit. Maybe the problems with Greece and its effect of pulling down all the economies of Europe are only those of the Currency of Choice. When the Greek Currency is changed back to the Drakma, Europe’s situation might change also in addition to lessening the Greek problems.
This is the way the Monthly Chart looks:
This is the way the Daily Chart looks:
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Long term FOREX trading
In the long run, you are better off finding a FOREX composite, either Dollar or cross linked, and using the services of a FOREX brokerage after you have thoroughly evaluated as to spread rates, commission, leveraging and honesty-track record, than trading FOREX through the respective futures. However, I use the futures contracts Charts to help you get an idea of the way the market is headed, especially for the long term and particularly to see the trends that the Foreign Currency Exchange is taking as a whole over the long run. And, I feel it my duty to point out that trading with the FOREX brokerages itself is a dangerous and very tempting game. The futures contract do follow more completely the technical analysis lines and patterns than FOREX. Therefore, while I do not disqualify FOREX trading in itself; because the truly professional and stout hearted investors have a lot to gain from it, I do indeed myself prefer the futures contracts as a cheap and non-leveraged alternative to FOREX trading.
I have below, for example, shown the Euro Dollar and the British Pound Sterling as they also are making a long term monthly symmetric triangle. This is in addition to the same pattern observed by me on the previous article concerning the US Dollar Index. The period of time that these triangles are forming in is for about more than a year and a half. It does seem that the time is soon that we will see a break in one of these triangles, maybe next month or even after. As I wrote earlier, the break is a buy signal, but there is no guarantee that the resulting movement, whether it be upwards or down, will continue all the way to its’ intended technical destination. Nor is it guaranteed, though it is likely in more than 60% of the time, that the pattern will indeed conform to the technical specifications it has. But 60%-75% is better than fifty-fifty and surely better than the 20% that we see on the average trade in the equity or FOREX markets.
Anyway, this is the Chart, the intention is to share a possible chance that I see that maybe even this month a pattern will be broken. Even then, caution is advised and follow up of the monthly investment not only with the Monthly Charts, but also with the Weekly and Daily Charts as well.
This is the way the Monthly Euro Chart looks:
