Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16
Owning Gold and Silver in Troubling Times - 29th Nov 16
Trump's Presidency - Stock Market Crash or Start of New Mega-Trends - 29th Nov 16
Prime Minister Modi's War Against Corruption, Black Money and Fake Currency Notes in India - 29th Nov 16
Can President Trump Really Drain the Swamp? - 29th Nov 16
President Trump’s Economic Plan Isn’t Going to Work - 29th Nov 16
The US Bond Bear Market Has Begun! - 29th Nov 16
Simple Yet Powerful Technical Trading Tools - 28th Nov 16
Public Infrastructure – Welcome to the World of Waste, Fraud, and Abuse - 28th Nov 16
Fifty Years Later, Moore's Computing Law Holds - 28th Nov 16
An Elusive Stock Market Top - 28th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

Euro Signs Of Caution For Upside Move

Currencies / Euro Feb 20, 2013 - 03:16 PM GMT

By: Michael_Noonan

Currencies

Oftentimes, first impressions are the best because the perceived information strikes the mind unfiltered by second and third impressions that may begin to second-guess the first. The weekly and daily charts of the Mar Euro are first impression expressions.

Many will look at this weekly chart, well, maybe not so many, but of those who do, they will see that the recent high rallied above the February 2012 swing high and conclude the Euro is acting well. We would disagree, and here is why.


What caught our eye was the steep decline within the box, noting how fast the rate of acceleration was on the decline. Every succeeding weekly high was lower than the one before it for 11 straight weeks. Sellers were clearly in control, and when challenged on the next rally, they will defend their "territory." The largest of all the bars is the first one that began the sell-off. The next bar after it was a failed rally against it.

The challenge to that seller's control area is now, or a few weeks ago. Recent price stopped right at where the acceleration and failed rally began. You can see how the Euro is in an uptrend since last July. The solid, lower support TL captures the trend. We drew a second, parallel supply line using the September 2012 swing high and extending it by dashed lines to reflect the fact that it is projecting into the future, from that point in time.

When price fails to reach the upper channel line, it is the market's way of telling us that the trend has weakened. It does not mean it is over, just a little weak. That leads us to the second observation that caught our eye, as it related the accelerated move down.

Two weeks ago, you can see a wide range bar down on a sharp increase in volume, right after the high, and it closes poorly. This should not happen if buyers are in charge, and the market may be sending an important message, once again.

We want to take a closer look at daily activity to determine if the character or this not-so- strong rally is in jeopardy. We say not so strong because the move up has been somewhat labored, backing and filling. Contrast it with the accelerated decline.

Markets do not lie. What they do is generate information that tells us what participants are doing in their buy/sell decisions. A similar channel has been drawn on the daily, and price reached an overbought condition on the first TD of February. [Trading Day]. Look at what happens next day. Not only is there no follow-through, price opens under the previous day's close and declines all day. What happened to the buyers?

We mentioned the wide range bar down, [weekly] and we see how it began on 7 February, accompanied by the highest volume for the contract. It pays to heed high volume days because they are an expression of increased activity between buyers and sellers, and who wins the battle can be important, even more important when it occurs at a certain area, like the current swing high.

The market continues to provide us with additional information over the next 4 TDs, with the 4th one culminating what can only be described as a week rally response to the wide range decline on heavy volume. Note where price closed on that day, 5th bar from the end.

The decline has found some support at the trend line, which should be expected, but more because of the small trading range in the middle of January that should act as support, or at least a buffer against a decline.

What may be key for Euro traders is how the market reacts from this week's low, so far. The character of the rally will say whether to expect higher prices to come, or abandon the buy side. In fact, depending upon how any rally may develop, the market could also be advertising a short sale. There is some history behind the reasoning that goes back to that area of acceleration a year and a half ago. It would be a mistake to overlook it.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife