Euro Has Nowhere To Go But Down

The following excerpts from past Market Updates clearly illustrate how we predicted the Top before the market started to crash.  Based on these developments, the Euro has nowhere to go but down.

If nothing is done to address this issue in a meaningful and logical manner, the Euro could melt down and in doing so potentially trigger another financial crisis.   There are strong signs suggesting that the Euro could correct strongly soon. 

Subscribers will remember when the dollar was rallying; we stated that the situation in the US was not any better or worse than in Europe and that the press was once again up to its normal tricks.  At some point in time, the press is going to start highlighting the problems facing Europe; with each story, they will make the problems look direr.  If the dollar starts to rally, these stories will push the dollar higher than it would have traded under its own impetus; this is exactly what is currently taking place with the euro; it overshot its stated targets because the dollar has been besieged with one negative story after another.   

Continue to hold onto your EUO positions for it’s a safe and simple way to short the Euro. If you have extra funds then consider deploying another portion should the Euro/USD hit the 1.50 ranges.

Despite the dollar trading to new lows, there are still many signals that continue to validate that the dollar is going to mount a multi-month rally. The time frames have moved but the pattern has not turned bearish.    Market Update May 3, 2011

If you have not already moved out some of your funds from the euro, then consider doing it now. In addition you can use strong rallies to lighten up your position further.  As the dollar rallies we expect all the major currencies to experience back breaking corrections.  The action of the past few days serves as a clear reminder of what lies in store in the months to come.   Ironically the best investment for the next few months is going to be the hated dollar.

The weekly close above 74.50 in record time was a strong positive development and validates the outlook that the dollar has put in a bottom.  Last week we stated that the dollar would need to close above 76.40 on a weekly basis to generate the next confirmation. However, nothing has changed in Europe and one could argue that the situation actually looks worse now than it did last year.  

In terms of the Euro, high V readings could have an even stronger impact when one considers the following facts. The euro was the only major currency that was unable to put in a series of new highs in the face of a weaker dollar. Euro2011

The Euro briefly traded above its main downtrend line; let’s see if it can hold above 140.00. A break below 140 will result in a resumption of the downtrend. The Dollar has generated one of the strongest positive divergence signals any market is capable of generating and the euro has generated one of the strongest negative divergent signals any market is capable of generating.  These two factors suggest/indicate that the Euro could cut through 128 and test its 2010 lows; potentially the Euro could go on to put in a series of all time new lows.  Traders with extra money would do well to use any strong rally in the euro to open new positions in EUO ( a safe way to short the Euro). Europeans should consider moving a portion of their funds into the dollar

The long-term trend in the euro is still negative despite having rallied for almost one year. Even the strong leg up from Jan 2011 to early May 2011 did not have an impact. It is the only major currency that has put in 3 lower highs instead putting in a series of new highs in the face weak and down trending dollar.  Market Update May 24, 2011

Conclusion

What we  have been stating since 2011 has come to pass and believe it or not the Euro is still not ready to put in a long term bottom. Like Gold, it is struggling to hold onto its gains. This rally in 2016, will eventually fail and the dollar will trend higher.  If the Euro lasts, which seems less likely with the passage of each day, it could eventually put in a bottom, but that day is not close at hand.

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