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"Silence is one of the hardest arguments to refute."
--Josh Billings

Sunday, May 29, 2011

EUR/USD...Uptrend or Downtrend?

With all the talk about the Euro this weekend, I thought I'd post a couple of charts on the EUR/USD. The first chart below is a Monthly timeframe. Price has not made a new monthly swing high since July 2008. Furthermore, the last swing to the upside that was made in November 2009 (1.5143) has not been broken yet, while a new swing low was subsequently made, instead. The trend is unclear on the monthly timeframe and price action could, in fact, be described as forming a potential broadening triangle (blue lines). The rising 50sma (red) is holding as near-term support since March of this year.

Price on the Daily chart below closed just below the rising 50sma on Friday. Price action has been forming a small downward sloping H&S since April of this year.

From a Daily and Monthly timeframe, it is unclear whether the trend is currently up or down.

On the first Weekly chart below, I've added a regression channel. Price closed on Friday at the +1 deviation point of a downtrending channel (dotted pink line) and is holding above the rising 200sma (pink). On the second Weekly chart below, I've added the Monthly TPO Profiles...the POC is shown as red horizontal lines.

In essence, it could be said that on a Weekly basis, the EUR/USD has been (and still is) in downtrend since July 2008. Significant resistance is immediately overhead and it will be interesting to see whether buying will step in above Friday's closing price or not.