EUR/USD May Be Turning The Corner….

I’m still bearish on the EUR/USD and the trade began to turn around today as the dollar bullishly engulfed its previous day’s candlestick for a gain of $.59 ).76%) and FXE retreated losing all of yesterday’s gains closing down $1.36 (.99%). In other words, the head and shoulders is still very much in play in the euro index and the dollar appears to be gaining strength yet again as people slowly begin to realize how much better of a position we are in than countries like Egypt for example.

If you’re interested to hear more on my position regarding the fundamentals, I wrote two articles last week that were all about the EUR/USD. Today however, I have nothing new to add except just that there are continuation signals in patterns that I have already pointed out. FXE is even farther away from resistance then when I wrote those articles and doesn’t appear to have any momentum to make a run in that range right now. FXE closed below the 20 day MA which adds to the bearishness in the trend though there will be some strong support at $134 as the 50 day MA will likely close in on that particular level by the time price activity trades near there. Overall I think that you can go short here with a stop at $137.15.

The dollar bullishly engulfed yesterday’s candle and though it did not close above the resistance line, it did close above the 20 Day MA which shows that there is bullish strength in this trend. I personally may go long UUP within the next 2-3 days and I also may decide to play the options market on this one. There is good volume on the $23 and $24 Jun 11 strikes, and even better volume on the $28 Jan 12 strikes. As of right now, the only thing keeping me out UUP call options is the irrationality that the dollar sometimes trades with. However I do think that $24 and $28 UUP is much more likely in 6-10 months than $20-$22 UUP. In any case, my position has remained the same, bullish on commodities, bullish on the USDX, and bearish on the euro.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

One Response to EUR/USD May Be Turning The Corner….

  1. Pingback: EUR/USD May Be Turning The Corner…. « Aaron Basile | Forex Exchange

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