2:38 م
Unknown
The continued weakness in the European economy is
reflected in the weekly euro-dollar chart. The euro-dollar exchange
rate is an indication of what investors think about the health of the
European economy. Expectations of change or decisive action to deal with
growing debt problems result in short-lived rallies followed by a
resumption of the long-term downtrend.
The
dominant feature on the weekly euro-dollar chart is the downtrend line.
The market has consistently reacted away from this downtrend line,
using it as a powerful resistance feature.
The
well established downward trend line A started in May 2011 from the
high at $1.49. The price has moved up to the line and then retreated
from the downtrend line on three occasions.
The
current rally has a high probability of also reacting away from this
trend line. This is a powerful resistance feature on the chart. On
current values, the euro must move to $1.275 to break above the value of
the downtrend line.
Downtrend
line B is parallel to downtrend line A and creates a down sloping
trading channel. Trend line B is used as a guide to the potential
downside for euro retreats. A retreat from trend line A has a potential
downside near $1.18 on the current value of trend line B.
The
$1.24 support level defined the limits of euro weakness in 2008 and
2009 but it did not provide good support in 2012. The next technical
down side historical support is near $1.16. The rebound rally from near
$1.20 is part of the pattern of rally and retreat in the environment of a
downtrend.
This
rebound develops in mid-air and is not related to an historical support
level. This suggests that the retreat from the downtrend line will
carry the euro [EUR=X
1.2977
-0.0002
(-0.02%)
]
towards the historical support level at $1.16. Using the value of trend
line B suggests the euro may reach the $1.16 target level towards the
end of 2012.
-0.0002
(-0.02%)
]
towards the historical support level at $1.16. Using the value of trend
line B suggests the euro may reach the $1.16 target level towards the
end of 2012.
The
$1.16 level is a minor support level established in 2005 and the level
has not been strongly tested. Support at this level may be temporary so
traders will treat any consolidation in this area with caution.
If
political solutions to the European debt crisis are unsatisfactory then
the $1.16 support target will fail. A fall below $1.16 has a downside
target at the next lower historical support level near $1.07.
The
euro-dollar move below $1.07 is not unthinkable. In 2001 the Euro was
trading at $0.88. There is low probability the euro will move above the
value of trend line A so traders prepare to go short as the retreat
develops from near trend line A.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders –www.guppytraders.com . He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.
If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com. We welcome all questions, comments and requests.
CNBC
assumes no responsibility for any losses, damages or liability
whatsoever suffered or incurred by any person, resulting from or
attributable to the use of the information published on this site. User
is using this information at his/her sole risk.
© 2012 CNBC, Inc. All Rights Reserved
0 التعليقات:
إرسال تعليق