Richard Perry
Independent Analyst
The technical rally continued yesterday as the Euro unwound some of its oversold excess that had built up following the monetary easing from the ECB. The daily chart is interesting as the momentum indicators are a little mixed. Whilst the RSI is showing a typical unwind of a bear market rally back towards 30 and the MACD lines are still in bearish configuration, the Stochastics have been bullishly diverging and have crossed back above 20. Now this improvement in the Stochastics alone is not enough to believe that this technical rally will turn into something more major but it is interesting to see that not every indicator is forecasting the plummet of the euro. However the tighter downtrend line over the past 6 weeks comes in at $1.1500and it does still look as though this rally is likely to come under selling pressure once more. The intraday hourly chart shows a small base pattern above a neckline of $1.1295 which targets $1.1490, but a rebound towards the old key support which is now resistance at $1.1460 is more likely. Bear market rallies tend to undershoot their upside targets so it will be interesting to how far this one goes before the sellers return.
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