Wednesday, July 21, 2010

Watch these euro chart levels as ndicator where stock markets are heading

The $XEU chart of the euro index is a great indicator to watch for clues to stock market direction. We were prepared when it turned up from that 119 area under our monthly chart Fibonacci level around 120. I wasn't 100% certain it would get all the way to 130 though I included that as one of the objectives - well that's where it got a couple days ago before taking a breather. Notice my monthly chart indicators are at lows. They may cross up and go positive - or not. Conversely, the daily chart of the ETF, FXY, shows indicators high and poised to cross down and weaken - or not. Something's gotta give.

More insistently, $XEU nosed up close to the 130.33 Fibonacci level that it broke under on the way to 119. This is part if the reason why 130 is strong resistance. If the euro rolls down, watch for moving average support first ; also the Bollinger Bands. If it really falls apart and drops under 119/120 again, we should brace for 112 with a "scary low" in stock markets. If it steadies, and finally rallies again, then the stock markets will also improve.

No comments:

Post a Comment