My last post was about ‘hammers’ that were printed on Friday. It remains to be seen if a bounce can develop and how meaningful it will be. After doing some more research and viewing hundreds of charts I thought a more in depth analysis of currencies and their relationship would be appropriate. It is obvious the Euro and the US Dollar have an inverse relationship. In order to gauge the strength of the US Dollar rally it is therefore imperative to analyze further potential Euro currency weakness.

Looking at the daily and weekly Euro price charts it seems to be the prudent thing to expect a bounce from these levels. Technically speaking the Euro is hitting strong support around the 135 level. The daily chart suggests a move testing the moving average 200 is a high odds expectation as the ABC correction should now be complete. We might have witnessed sellers exhaustion. The hammers in Gold, Silver, AGQ – ProShares Ultra Silver ETF, and the Euro chart pattern will put a lot of pressure on the US Dollar bulls in the immediate future.

Up-to-date Short Term Daily Euro Price Chart on my public list.

Up-to-date Long Term Weekly Euro Price Chart on my public list.

Overall the long term charts and the technical picture of the Euro still look much stronger than the US Dollar. We still have huge overhead resistance with the US Dollar. A while back I outlined technical price targets for the US Dollar.

Up-to-date Short Term Daily US Dollar Price Chart on my public list.

Up-to-date Long Term Monthly US Dollar Price Chart on my public list.

Keep in mind to be mentally prepared for unexpected US Dollar developments and vicious rallies. The markets have a tendency to trap the majority. Protect yourself in case your analysis is wrong and the worst case scenario unfolds. Also keep in mind the fact gold made new highs while the US Dollar didn’t make new lows technically speaking has to be interpreted as US Dollar strength.

“If it’s obvious, it’s obviously wrong.” Joe Granville

Have a great weekend!