Time for a Euro bounce?

January 23, 2012

FOREX

The Euro has been under pressure again lately, as well it might given moribund politicians and problems with Club Med (PIIGS as we call them now).

But this year to me might be the year of divergence – divergence of markets from economics. Now those of us who have been around long enough won’t be surprised by this but many will.

Indeed check out this chart of the net Euro short positions against the US Dollar via the CFTC and Bloomberg. This is a weekly chart going back to 2000.

20120123-151148.jpg

What do you see? A record number of Euro shorts.

What does this tell you? The path of least resistance might just be up!

20120123-152650.jpg

The chart above shows the long term weekly Euro chart which is analogous to the positioning chart above. It’s not a perfect uptrend line but Euro might have some long term support its just bounced off.

20120123-154157.jpg

Equally the chart below, which I spied over the weekend and added my own stuff suggests Euro just might be turning. A close above 1.2980 would be the first sign with 1.3245 the big resistance looming a few big figures higher.

This potential move fits with my current outlook and I don’t think that markets are finished rallying yet. The Australian Dollar’s weekly close was really strong as well – but I’ll write about that tomorrow.

www.twitter.com/gregorymckenna

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation

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  1. Industry Founders as Australian Dollar heads higher | Lighthouse Securities - January 24, 2012

    […] when I wrote about the Euro Bounce , which fortuitously occurred overnight (I’ll take my luck when it comes ) I also said the […]

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