Tuesday, September 9, 2014

Candle Quick; Euro Currency - Ready…Bounce

There are few Euro currency bulls out there and likely even fewer who would proudly raise their hand today.  However, there may be reason to be watchful for a bullish reverse.  First there has been 15 new session lows within the last 17 sessions; an indication of an extremely stretched market.  Secondly, the 14-day RSI reads 18.3 as I write, just above the 16.25 mark yesterday and as low a reading as seen since 6 years ago tomorrow, just before Lehman, on Sep. 15, 2008 declared bankruptcy. Moreover, on the Sep. 10 date the Euro Currency put in the Sep. ’08 low, it also formed a doji bottom.  Following that session, the Euro advanced more then 10 points before completing its long slide to 138.38 in October ’08. 

Finally, today’s price action (not yet completed) is potentially forming a bullish hammer bottom.  This of course has not been fully established and certainly the bullish implications have not been confirmed by tomorrow’s price action.  However, it does warrant attention and even longer-time frame bearish minded position holders might consider lightening up on their position to see how this development unfolds.  Of course if the masses shouting ‘par’ are correct, then there is plenty of time to rejoin the trend if it continues to fall without a correction. 

To sum; the Euro retreat is stretched and showing oversold conditions while there is a potential bullish technical reversal in formation today.  A world full of analysts are shouting ‘par’ and there are few shorts remaining on the sidelines (already participating short).  Good chance for a bullish bounce…possibly in the order of 5-10 points as seen in ’08. 

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