Richard Perry
Independent Analyst
There are mixed signals on the euro of late. In some ways yesterday’s session was a touch disappointing as an outside day was recorded after a new low was hit at $1.3436 and a subsequent rally was seen. However the rally could not be sustained and not the euro has formed a second consecutive “doji” candlestick which denotes uncertainty with the prevailing trend. The bears will argue that this is exactly what happened at the end of last week, but this time around the RSI is at 30 which leads to the prospect of a technical rally (although momentum is still very weak on MACD and stochastics). It is difficult and often unwise to bat against the trend and a stepped decline seems to be moving towards the $1.3375 implied target from the double top. However, I would say that the chances of a rally are improving but there needs to be a signal first. That would probably be a move above yesterday’s reaction high at $1.3484. The issue would be then the matter of significant overhead supply at $1.3500 and then $1.3550 and most importantly at $1.3575. It is unlikely that any technical rally would get very far before the selling pressure tells once more.
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